[Dongeul Dongeul] "The Drug Musk Used to Lose Weight"... US Companies Struggle with Insurance Costs for Obesity Treatments

At the end of last year, Elon Musk, CEO of Tesla, captured public attention with a slimmer appearance after losing 14 kg. Just that summer, Musk was seen swimming at the beach with a bulky physique, but he successfully lost weight in a short time. When netizens asked about his secret to dieting success, Musk gave a clear answer: "Fasting and Wegovy."

Wegovy, along with Ozempic, is a drug that has recently gained great popularity in Hollywood as a new weight loss medication. Compared to Saxenda, which was previously popular for weight loss, Wegovy requires only once-weekly dosing, making it convenient, and its weight loss effect is so significant that it is called a game-changer in obesity treatment.

However, American companies are reportedly struggling because of Ozempic and Wegovy. As more employees want these drugs, the burden of workplace health insurance premiums has increased. Today, we will look into how much economic loss U.S. companies are experiencing due to these obesity treatments.

Elon Musk, CEO of Tesla
Photo by AFP Yonhap News

원본보기 아이콘

Ozempic and Wegovy are famous not only for their outstanding effects but also for their high prices. Ozempic was originally developed as a treatment for diabetes. However, its main ingredient, semaglutide, increases insulin secretion and lowers blood sugar, suppressing appetite, which led to its popularity as a weight loss drug.

Obesity treatment drug Wegovy launched by Danish pharmaceutical company Novo Nordisk [Image source=Bloomberg]

원본보기 아이콘

As Ozempic gained popularity through word of mouth, Danish pharmaceutical company Novo Nordisk released 'Wegovy,' a drug with the same ingredient, specifically for obesity treatment.

The price of a one-month supply of Wegovy is around $1,350 (approximately 1.78 million KRW). Ozempic is prescribed at about $930. Despite these high prices, the excellent effects have caused a global shortage of both drugs.

U.S. companies have suffered significant financial losses as these drugs have become popular. The number of employees prescribed these medications has surged, causing a sharp increase in employee health insurance premiums that companies must bear. While Ozempic is not covered by insurance when used for weight loss purposes, Wegovy, released as an obesity treatment, is eligible for insurance benefits.

[Image source=Bloomberg]

원본보기 아이콘

According to The Wall Street Journal (WSJ), U.S. companies are currently paying tens of millions of dollars in insurance premiums due to Wegovy.

For example, the University of Texas saw its employee insurance premiums triple over 18 months and has notified employees that it will stop covering Wegovy under insurance starting next month. The total insurance premiums paid by the University of Texas over 18 months amounted to $5 million, equivalent to about 6.5 billion KRW.

Ascension, the second-largest healthcare company in the U.S., also stopped insurance coverage for Wegovy starting last month to reduce insurance costs. The University of Michigan has implemented a measure to increase employee copays for Wegovy prescriptions from $20 to $45.

Companies complain that even though employees successfully lose weight with Wegovy and the incidence of adult diseases decreases, they see no reduction in insurance premiums. Because the prescription price of Wegovy is so high, insurance costs continue to rise despite a decrease in metabolic disease rates.

State governments in the U.S. are also struggling with the cost burden caused by obesity treatments. Connecticut estimates that it will spend $30 million this year on prescriptions for obesity drugs like Wegovy. The budget for obesity drug prescriptions in Connecticut has increased by 50% since 2020.

원본보기 아이콘

There are growing concerns that the sensational popularity of Wegovy may have adverse effects on obesity treatment in the U.S. As the perception spreads that obesity is a disease rather than a result of lifestyle habits, American companies have actively cooperated in obesity treatment. However, faced with enormous costs for expensive treatments, companies are now putting the brakes on insurance payments.

In South Korea, Wegovy received approval from the Ministry of Food and Drug Safety in May, drawing attention to its potential popularity in the obesity treatment market. However, since obesity is not covered by indemnity health insurance in Korea, it is unlikely to cause insurance premium burden issues.

© The Asia Business Daily(www.asiae.co.kr). All rights reserved.