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Navigating the Variances: Payer vs. Employer Coverage for Infertility and Obesity Drugs

By Grace Casaschi

As healthcare costs continue to climb, insurers are eager to control their spend. According to WTW’s Global Medical Trends Survey, 58% of insurers anticipate higher medical trend over the next three years. How stakeholders approach cost containment varies significantly depending on their priorities and incentives.

Payers, pharmacy benefit managers (PBMs) and employer benefit managers (EBMs) have varying relationships and responsibilities depending upon their level of risk and decision-making power. In some cases, payers are the final arbiter of member benefits, while in others, employers influence their employees’ coverage. These stakeholders’ roles in determining and/or influencing coverage should be considered by manufacturers when deciding contracting and rebating strategies.

Let’s take a closer look at how two categories in particular, obesity and infertility, are managed differently by payers and EBMs—and explore the impact of these variances on patient access.

EBMs offer more comprehensive infertility coverage

Infertility is a complex medical condition characterized by the inability to conceive or carry a pregnancy to term despite regular, unprotected intercourse for at least a year. In-vitro fertilization (IVF), the most common form of treatment for unexplained or male-factored infertility, is prohibitively expensive for most couples. One study found that patients who used IVF to achieve a successful pregnancy incurred an average cost of $61,377.

To better understand the differences between payer and employer coverage for IVF and other infertility treatments, the MMIT Index team conducted a survey of 10 payers and 10 EBMs who are the ultimate decision-makers for their members. The data revealed a discernable trend: EBMs tend to offer more comprehensive coverage for infertility treatments as compared to payers. While the overall coverage of infertility treatments is similar, EBMs are 20% more inclined than payers to cover IVF treatments.

This distinction may be directly tied to the priorities of EBMs as compared with their payer counterparts. Given the widespread appeal of IVF for the growing number of employees who are choosing to start families later in life, many employers reason that offering comprehensive infertility coverage might help them attract top-tier talent. In fact, two of the EBMs surveyed indicated that they consider IVF treatments their “most attractive benefit.”

How cost-benefit analyses differ for EBMs

This response aligns with the data from Mercer’s 2021 National Survey on Fertility Benefits, in which employers ranked key reasons for covering infertility treatment. At the top of the list were ensuring employees have access to superior and cost-efficient care; staying competitive to recruit and retain talent; and fostering a corporate image as a family-oriented employer. These motivations are reflected in the 6% increase in IVF coverage by larger companies from 2015 to 2020.

Somewhat surprisingly, 97% of all employer decision-makers who cover infertility benefits—including those who offer IVF benefits—report that they have not experienced a significant increase in medical plan costs.  This may be due to the restrictions placed on total spend.

For example, in our MMIT survey, 75% of the EBMs who provide coverage for infertility treatments do set limitations on the duration or frequency of medical interventions. Two of the surveyed EBMs specify a monetary cap, setting it at a reasonable $50,000. With the right safeguards in place, the consensus seems to be that the benefits derived from IVF coverage far outweigh the associated costs for employers.

Widespread obesity treatment coverage

Obesity, a complex condition characterized by excessive body fat, significantly elevates the risk of a wide range of diseases. The Centers for Disease Control and Prevention report that 41.9% of Americans are currently obese; by 2035, the percentage of adults with obesity is expected to climb to 58%.

In MMIT’s comparative analysis on the coverage of obesity drugs, we found that 9 out of 10 responding payers and EBMs decision-makers do cover at least some obesity treatments. One EBM abstains from providing coverage, citing concerns over the unproven long-term effects of medication coupled with the high cost of treatment for its population. The abstaining payer is now considering coverage as better options become available.

Among those offering coverage for obesity treatments, the dominant trend entails adherence to FDA regulations. These payers and PBMs have a prerequisite for patients or employees, such as prior authorization criteria which is often tied to body mass index (BMI) thresholds.

Emergence of high-cost weight loss drugs

The utilization of obesity treatments has surged in the past year as the semaglutide Wegovy entered the market. For patients without insurance coverage, Wegovy’s annual list price of $16,000+ can impose a significant financial burden. The increased adoption of GLP-1 drugs like Wegovy and Zepbound is expected to rapidly escalate both employer and payer healthcare expenses.

When MMIT’s survey respondents were asked about the delicate balance between cost reduction and their responsibility to delivery top-notch healthcare, several EBMs affirmed their commitment to providing quality healthcare to their employees. These EBMs emphasized that providing desirable insurance benefits not only aligns with their ethical principles, but also serves as a pivotal factor in attracting and retaining a high-caliber workforce.

While the drive to maintain their competitive edge remains a priority for EBMs, this rationale doesn’t hold true for payers. The escalating demand for weight loss therapies poses a significant financial burden on payers, leading to their reluctance to cover these high-cost drugs.

In a recent Fierce Healthcare article, Ceci Connolly, CEO of the Alliance for Community Health Plans, emphasized the need for a cautious approach given “some alarming adverse events and the steep price tag” of these drugs. In addition to cost and safety concerns, many payers are reluctant to cover drugs that may not lead to sustained weight loss or long-term health benefits. Just as many payers do not consider IVF to be a medically essential treatment, many also view the latest weight loss drugs as medically unnecessary—although this may change as more data is collected and the market shifts.

In conclusion, our comparative analysis reveals marked differences in how payers and EBMs determine coverage for infertility and obesity. The distinction of which organization is the ultimate decision-maker can have profound implications for healthcare outcomes. Patients seeking infertility treatments or obesity medications face varying levels of access, depending on whether their coverage falls under a payer’s or an employer’s benefit plan. Fostering dialogue about the long-term benefits of these treatments may help to align payer and PBM priorities—and improve patient access to vital medications.

For more insights into payer, IDN, and EBM behavior, learn how the MMIT Biologics and Injectables Index can guide your commercial strategy.

© 2024 MMIT
Grace Casaschi

Grace Casaschi Author

Grace Casaschi is a Senior Market Research Analyst at MMIT.

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