Can Virtual Obesity Care Providers Alleviate the Costs of GLP-1 Drugs ?
Virtual Obesity Care
Obesity care in the US is enormous - $173 billion and expected to reach $250+ billion by 2027. With over 70% of US adults considered overweight (BMI > 25) it is both a huge market and a huge source of health issues across the country. The market has recently been catalyzed by the historic success of GLP-1 agonist drugs in weight reduction and the resulting rapid growth in patient demand.
The high cost and substantial demand of GLP-1s have the potential to strain the economics of healthcare – notably the payor system, both on the insurance and the self-insured employer side. This has created a pressing need to find ways to mitigate costs. To address these concerns, several virtual care providers have launched obesity management programs to help control costly drug prescriptions and win the business of payors and employers.
The Care Model
Many of these virtual care companies have enterprise products that combine virtual visits and prescriptions with lifestyle coaching to support sustainable weight management. Their hope is that payors and employers will offer their programs for metabolic health, or even require them if patients want their drugs reimbursed. A number of approaches have evolved - with varying levels of GLP-1 access, though all tend to offer coaching and promote lifestyle changes.
Providers typically offer a single approach or a mix of the below approaches:
1. No GLP-1s: providers offer coaching, peer support and educational materials to patients already taking GLP-1s, and/or only prescribe less costly weight loss medications
2. Non-obesity (Diabetes) GLP-1 prescriptions: GLP-1s are not prescribed to treat obesity, but are available for some patients with type 2 diabetes
3. Restricted GLP-1 prescriptions: often have a broad formulary of obesity medications that are less expensive (often generic). GLP-1s are more restricted and offered only to a subset of obese members with proven clinical need
4. Contingent GLP-1 prescriptions: clinical support and medications to members who have demonstrated commitment to lifestyle changes
5. Triaging: upon onboarding, providers send customers to behavioral-based weight programs or clinical programs
6. GLP-1 prescriptions: providers explore GLP-1 options with members and mandate close coaching, monitoring and support through insurance navigation to help procure cost effective medications
As virtual obesity care providers look to save costs for employer and/or payor partners, they often differentiate on the level of GLP-1 prescriptions they provide, thus translating into a level of savings for their partner. These programs have effectively become prior authorization and in parallel also offer members adjacent lifestyle solutions.
The challenges
For virtual obesity care solutions to gain traction with employers and payors, they need to show both cost control and clinical outcomes. However, providers have faced various challenges:
Need for compelling data: obesity virtual care providers need evidence-based programs. To date, providers offering alternatives to GLP-1s have yet to demonstrate robust clinical results proving that their weight management program can beat (or match) the weight loss results of GLP-1s. It remains unclear at best that non-GLP-1 programs will lead to sustained weight loss. For those prescribing GLP-1s, the ability to end treatment and maintain weight loss is also yet to be shown in a convincing fashion.
Diet programs have had limited historical success: As the CEO of a weight management platform said, “[h]istorically, many employers offered weight management programs to give something. We kind of know they don’t work, but we need to offer a diet program or weight loss program, anything, to our employees so they feel like we’re taking care of them”. The financial stakes for GLP-1-driven programs are high, so motivation is instead driven by cost savings. Providers are thus incentivized to save costs for employers and health plans, primarily by focusing on non-GLP-1 weight loss treatments. It remains to be seen if changing the provider’s motivation alone is sufficient to change what hasn’t worked well historically.
Incentive misalignment: providers are incentivized to restrict GLP-1 prescriptions, but consumers have little reason to adopt diet and exercise, or alternatively to combine behavioral changes with less costly drugs, because their GLP-1 medications work well (and often diet and exercise don’t). It is extremely challenging for providers to realize cost savings if patients are not incentivized to pursue behavioral changes that are expected to drive weight loss via non GLP-1 therapies.
Competitive landscape: at this point, providers are still testing different clinical models that surround varying degrees of GLP-1 prescribing flexibility, but providers need to develop a sustainable product moat, clinical results or cost savings. This leaves little justification for premium pricing.
The Bottom Line
While weight management programs have been around for a while, there has typically been little accountability by providers to patients’ long-term weight loss objectives. However, this time could be different if the cost of GLP-1s requires changing behavior. The question is whether providers can crack the code of weight loss via coaching, diet and other (less expensive) weight loss drugs. Providers haven’t been able to generate sufficiently robust data to date to show that they can, but they continue to try and focus on combining lifestyle changes with obesity medication to win payors and employers.
