Monthly Healthcare Insights: High-cost drugs, GLP-1 shortage

High cost of newly approved drugs hitting employers and patients

The Food and Drug Administration (FDA) has a fast-track program to approve drugs that appear promising in treating otherwise untreatable diseases. Drug companies must keep studying the medications in phase four trials to prove they work. It can take over 10 years to take back FDA approval if studies don’t show they work. In 2024, 14% of new drugs went through the FDA’s accelerated approval pathway.

Patients with these diseases need fast approval. They often won’t live for years waiting, and they want and need to get new drugs quickly. On the other hand, once a drug is approved, many patients will no longer receive the drug for free (either in a clinical trial or through a compassionate use request). Pharmaceutical companies don’t have much reason to rush to finish trials. If the trials don’t show the drug works or is safe, the drug company will have to take back the drug.

The FDA approved Relyvrio (sodium phenylbutyrate-taurursodiol) in 2022 to treat amyotrophic lateral sclerosis (ALS - Lou Gehrig’s Disease). They approved Relyvrio because of good results from a small clinical trial. The drug was priced at $150,000 annually. The drug was withdrawn from the market last year when it didn’t appear to be statistically significantly better than a placebo.

Researchers in the New England Journal recently said that the FDA can’t consider costs when it decides if a drug should be approved. This is true for both the traditional and the expedited drug approval processes. They say that drugs that are too expensive can make patients not follow therapy and can lead to financial insecurity for patients and their families. They suggest a review board to recommend pricing on drugs that are approved quickly. They also suggest drug labeling to remind patients that more definitive research on the drug’s effectiveness isn’t yet available. They also suggest policies to limit out of pocket expenses for patients taking drugs that have been approved through an accelerated process.

Implications for employers:

• Newly marketed drugs can make the difference between life and death for patients. However, high out of pocket costs can upend patients and families’ finances.
• Employers should look at their plan design to make sure that their members can get expensive drugs when there are no well-established effective alternatives.
• Prior authorization can confirm accelerated approval drugs are being used appropriately.
• The continuing escalation of drug prices threatens the affordability of health care for both employers and their plan members.

FDA says that the GLP-1 shortage is over

Just a few weeks after a Super Bowl commercial for a company that sells compounded GLP-1 anti-obesity medications ignited controversy, the FDA has determined that the shortage of semaglutide (Ozempic, Wegovy and Rybelsus) is over. The FDA found that the shortage of tirzepatide (Mounjaro and Zepbound) ended in December.

The FDA allows bulk compounding of prescription medications, which are in shortage, and many Americans are now taking compounded GLP-1 medications. The FDA will allow continued compounding of semaglutide until later this spring and announced that it will not take action against compounding pharmacies or distributors for tirzepatide until later this spring or when an injunction against the FDA is lifted. Compounders have already sued to delay the date when they are prohibited from compounding semaglutide, too.

There are two kinds of compounding pharmacies, 503a pharmacies, which can use active pharmaceutical ingredients to compound medications that are personalized for individuals, and 503b pharmacies, which can do bulk manufacture of compounded medications. The FDA regulates the 503b pharmacies, and some of them do contract manufacturing for pharmaceutical companies. The 503a pharmacies will likely be able to continue to make GLP-1 medications in doses different than those available from the manufacturers, or with added vitamins or other drugs even if the FDA prevails in these court cases. One company has already announced that it will stop manufacturing the doses of semaglutide that are available as Wegovy, but will continue to make “personalized” doses.

Implications for employers:

• Although almost half of employers stated that they were interested in the potential for compounded GLP-1 medications, according to WTW’s 2024 Best Practices in Healthcare Survey, only 7% said they were “very” interested, and there has been very little employer uptake of compounded medications.
• If compounded GLP-1 drugs become unavailable, employers will face increased pressure to provide coverage for GLP-1 medications for their members who are obese or overweight with a metabolic complication.
• Patients who are on GLP-1 medications and stop them generally regain a substantial amount of the weight that they lost.

Increased health insurance costs lead to lower employee wages

Economists have always said that higher health insurance costs replace other forms of pay, like retirement contributions or wage increases. Researchers in JAMA Network Open found that increases in health insurance premiums between 1988 and 2019 led to about a 4.7% decrease in employee wages. The average employee would have had about $8,000 more in income in 2019 if health insurance premiums had only increased at the rate of inflation.

Health insurance premium increases are much worse for low-wage workers because health insurance premiums make up a much larger part of their total pay. About a quarter (27%) of employers use salary banding. This is where they charge lower-wage workers a smaller portion of their health insurance premiums to reflect their ability to pay. Health insurance price increases also encourage employers to automate or offshore work that lower-wage workers previously performed.

Implications for employers:

• Lowering the cost curve on health care premiums can help employers offer better wages or other forms of compensation.
• Rapid increases in health insurance costs are more likely to cause financial insecurity among low-wage workers.
• Structuring financial contributions to reduce costs for lower-wage workers can help, but this problem will persist until health care cost inflation slows.

More evidence that spinal steroid injections often don’t help back pain

It’s hard to treat patients with severe, unremitting back pain. Their pain is real and they are clearly unable to function, but medical therapy often doesn’t help. Furthermore, anatomy often doesn’t explain pain. Some people have no back pain at all but an MRI done for another reason will show severe arthritis. Others will have disabling pain, but their MRIs won’t look especially abnormal.

Many with severe back pain are treated chronically with narcotics. These offer pain relief, but about 8% will become addicted. Narcotic addiction can lead to terrible social problems, inability to work and take care of family members and even early death.

Many with severe back pain will have surgical procedures, ranging from trimming disc material that impinges on nerves to implanting hardware to stabilize the back. Some patients unequivocally need back surgery, especially if they have cancer in their spine or have a nerve that’s being pinched and isn’t functioning well. However, back surgery can have many adverse impacts and is very expensive. Worse still, back surgery often doesn’t bring relief. Some estimate that 60% or more of back surgeries for pain are inappropriate.

Clinicians clearly would like another approach -- and over the last two decades, steroid injections of the back have become a $9 billion a-year business. They are less invasive than surgery and provide relief to some who get little relief from medications or physical therapy.

These back injections are sometimes overused. Here’s a link to a recent KFF Health News report about a multi-state clinic that fraudulently required epidural injections to refill narcotic prescriptions. Some patients got more than a dozen shots a month, and two patients got over 500 shots each.

The American Academy of Neurology just published a study of 90 randomized controlled trials of epidural steroid shots for back pain. The study found evidence that they were okay to treat short-term pain, but didn’t help when treating long-term pain from radiculopathies (inflamed nerve roots) or spinal stenosis (blockage). BMJ (formerly the British Medical Journal) published a similar study a few days earlier that found similar results, and it recommended against epidural steroid injections for most non-cancer back pain.

Implications for employers:

• Members with back pain can benefit from early evaluation and referral to physical therapy, as well as a course of anti-inflammatory drugs (like ibuprofen).
• Lower back surgery should be a last resort. It should only be done if there’s a neurological problem with a nerve that is impinged, like weakness in the foot.
• Although there’s much pushback against prior authorization (PA) from members and physicians, employers should expect their health plans to use PAs for epidural steroid injections and spinal surgery as these are overused and often low-value procedures.

Workers express both fear and excitement about AI

The Pew Research Center recently reported that workers overall are more worried than hopeful about the future use of artificial intelligence (AI) in the workplace. In a survey of 5,273 employed U.S. adults, lower- and middle-income respondents were more likely to feel that AI would lead to fewer occupational opportunities for them compared to upper-income workers. Over a quarter (26%) of low-income workers reported that they hadn’t heard of workplace AI use. Overall, more than half (52%) of respondents reported that they were “worried” about AI in the workplace, while around a third said they were hopeful (36%), overwhelmed (33%) and excited (29%).

Currently, almost two-thirds of workers (63%) say they don’t use AI much or at all, while about one-sixth (16%) said that they use AI for at least some of their work. Those with college degrees and under age 30 were more likely to report that they use AI. Those who used AI were most likely to use it for research (57%), editing (52%) and drafting written content (47%).

Those with more education, who lived in the suburbs, and who worked with data processing were more likely to say that some portion of their jobs could be done by AI. Those with higher incomes were twice as likely to report that they were hopeful or excited about AI in the workplace. Those in IT and finance reported that they believed AI would lead to increased job opportunities.

About half (51%) of the people who answered said they had taken any kind of class or training in the last year. A quarter of those (24%) said the training was about AI. Forty percent of respondents reported that chatbots helped them do tasks more quickly, while only 29% said that chatbots improved the quality of their work. Those who were younger, had more education and used chatbots more found the technology most helpful.

Implications for employers:

• This survey likely underestimates the use of AI, since many are using AI to do research, editing and writing without realizing it.
• It’s not surprising to find many workers anxious that AI will diminish their job prospects. This is typical of new and emerging technologies.
• I believe that AI will follow the trajectory of other substantial technological advances. Many people overestimate how much change this will cause in a year or two but vastly underestimate how much AI will change jobs over the next decade.

Author

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Jeff Levin-Scherz, MD, MBA

Managing Director and Population Health Leader

Jeff is an internal medicine physician and has led WTW’s clinical response to COVID-19 and other health-related topics. He has served in leadership roles in provider organizations and a health plan and is an Assistant Professor at Harvard Chan School of Public Health.

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