Why Are Canadian Insurers Waiting To Add Anti-Obesity Drugs?

As anybody working in the employee benefits industry knows, the still relatively new class of medications known as GLP-1 drugs, initially developed to treat Type 2 Diabetes and now used for weight loss, have hit the market with an explosion. 

GLP-1 drugs like Ozempic were soon being used to help people lose weight after seeing the positive outcomes achieved in Diabetes patients.The demand for Ozempic to treat weight loss grew significantly as corporate advertising and social media coverage saturated the market and drove personal interest of those struggling with weight loss.This surge in utilization for GLP-1 drugs for both Diabetes and weight loss helped propel the Diabetes category of drugs to the top therapeutic category in Canada based on total expenditures.

The use of Ozempic to treat weight loss is what we call in the industry “off label” use, as it is being prescribed for a condition (weight loss) which has not been approved by Health Canada. Ozempic was specifically approved for the treatment of Diabetes.Given the significant cost increases, the majority of insurers in Canada have now developed protocols so that these GPL-1 Diabetes drugs are only covered to treat Diabetics.At the same time, essentially the same drug, Wegovy, was launched in the Canadian market and approved by Health Canada for anti-obesity (aka weight loss).Ozempic and Wegovy have been developed by Novo Nordisk but there are other equivalent drugs coming soon to the Canadian market from Eli Lilly – Mounjaro and Zepbound respectively.Undoubtedly other pharmaceutical companies will be developing similar drugs given the massive financial success of these medicines.

In spite of the flurry of activity in the market and the interest shown by people searching for solutions to help them lose weight and also interest from employee benefits plan sponsors who are wanting to support their employees, the Canadian insurance industry has been relatively slow to act.Why?

Based on a recent informal survey of Canadian group benefit insurers on the subject of anti-obesity drugs conducted by ZLC Employee Benefits Solutions, here is what we learned:

• The majority of insurers do not include anti-obesity drugs in their standard benefits offering.Even though these drugs are approved by Health Canada and require a prescription from a physician, anti-obesity drugs are not automatically included.Weight Loss Drugs are considered an optional category of drug coverage that plan sponsors must request. Why are weight loss drugs treated differently then other legal prescription drugs to treat other medical conditions which are automatically included, particularly when obesity is classified as a chronic disease?

• Even when plan sponsors add the Weight Loss Drugs category to their plans, Wegovy (GLP-1 drug approved for weight loss) is not yet being covered by the majority of Canadian insurers.Clearly insurers are concerned with cost, so most have indicated that this drug will be subject to “Prior Authorization” protocols, but they have yet to articulate what those protocols will be.

• Even though these new GLP-1 weight loss drugs are effectively not yet available to many employees, the insurers are providing quotes to plan sponsors to add the Weight Loss Drug category.It seems strange that insurers are providing quotes, ranging roughly from cost increases of 1% to 3% while prior authorization protocols are still being developed.It appears they are not factoring in the potentially much higher utilization when these new drugs will be available.As such, these plan design quotes are likely misleading and understated and plan sponsors should not be relying on them.

The Canadian insurance industry appears to be waiting to cover these drugs, which is surprising but not really surprising.Given the potential cost to employee benefits plans, based on the “off label” use of Ozempic, the overall increase in costs to include GLP-1 weight loss drugs could be significant. It appears that their solution, still under development, is to establish protocols that will approve these drugs only for those in most need (their opinion of clinically appropriate use).As annoying as these protocols can be, they help plan sponsors with the sustainability of their drug plans.Again, surprisingly, Canadian insurers must have seen this coming with all the media and social media coverage over the past couple of years, so why were they not working on this already.As well, the category of weight loss drugs is not really new, since we have had other weight loss drugs available on the market for quite some time with drugs like Xenical, Contrave and Saxenda.

As we have noted before, we hope that the Canadian insurance industry is also looking at the effectiveness of these drugs in achieving weight loss and enabling better health outcomes.These results could very well result in reduced utilization for other items currently covered in employee benefits plans:(1) drugs for blood pressure, cholesterol, and depression; (2) medical supplies for CPAP machines, knee braces, and wheelchairs.; and (3) services of paramedical practitioners for massage, physiotherapy, chiropractic, and mental health.Perhaps with the right protocols for weight loss drugs and additional support around nutrition and fitness, Canadian insurers could actually reduce the overall costs of employee benefits plans in the long run.

The delays we are experiencing give us the feeling that this is simply not a priority with Canadian insurers.This is surprising given that over 60% of Canadians are either obese or overweight. This alarming trend has unfortunately been the reality for quite some time as obesity rates increase annually.Instead, we have seen prioritization of other initiatives, such as fertility treatments and transgender support.These initiatives are certainly important, and benefits plan sponsors are looking for support for their Diversity, Equity and Inclusion initiatives, but perhaps support for obesity should rank as high given the relatively poor health of Canadians.

We would be pleased to discuss your specific situation with you to identify the best strategy for your employee benefits plans. Should you have any questions on the above, please do not hesitate to contact any member of our team.

ZLC Employee Benefits Solutions is one of the fastest growing advisors for employee benefits and group retirement programs in Vancouver and we are fortunate to have the best people, resources, and clients. We provide value by leveraging one of the most skilled benefits teams – collectively over 450 years of experience within our team of 21 employee benefits specialists. We have been working with businesses ranging from 3 to over 75,000 plan members for almost 40 years.