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Weight loss drugs: Why state health providers should cover them

North Carolina's state health plan will deny coverage of some GLP-1 weight loss drugs, including Novo Nordisk's (NVO) Wegovy and Ozempic, and Eli Lilly's (LLY) Mounjaro. The state claims the drugs are too expensive to cover.

University of Pennsylvania Vice Provost for Global Initiatives Dr. Ezekiel Emanuel joins Yahoo Finance to discuss why he feels the drugs are cost-effective for certain patients, and offers strategies for the state to pay for the coverage.

Emanuel explains how North Carolina State health officials advanced a limited view of cost-effectiveness: "If you look at the cost-effectiveness analyses of these drugs for patients who have obesity, they're cost effective. They, in fact, meet [the executive director of the health plan's] criteria, and they do a lot of good for patients who have obesity. Not only do they reduce weight, they also reduce their risk of cardiovascular disease by 20% in the first year. So, they meet his standard of cost-effectiveness. He did not actually do the calculations and examine whether they're cost-effective or not."

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

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Editor's note: This article was written by Nicholas Jacobino

Video transcript

[AUDIO LOGO]

JULIE HYMAN: North Carolina's state health plan is denying some coverage of GLP-1 weight loss drugs, including Wegovy, Ozempic, and Mounjaro as of April 1. The states saying the drugs are too expensive. Our next guest, though, says it's more cost-effective in the long term to continue that coverage.

For more, we have University of Pennsylvania Vice Provost for Global Initiatives, Dr. Ezekiel Emanuel. He covered this in a recent op ed. Dr. Emanuel, first of all, thank you so much for being here. So the state is saying that they are not going to-- they are going to grandfather in the folks who were approved to have coverage of these drugs last year. But from April 1, they are no longer going to cover them. Why do you think that this is not the most cost-effective move in this case?

EZEKIEL EMANUEL: So the justification for changing their policy, according to the executive director of the health plan, was it has to be cost-- guided by cost-effectiveness, he said. And we have to do the greatest good for the greatest number. But in fact, if you look at the cost-effectiveness analysis of these drugs for patients who have obesity, they're cost-effective. They, in fact, are meet his criteria. And they do a lot of good for patients who have obesity.

Not only do they reduce weight, they also reduce their risk of cardiovascular disease by 20% in the first year. So they meet his standard of cost-effectiveness. He did not actually do the calculations and examine whether they're cost-effective or not.

We also point out that the North Carolina health plan covers many drugs that are much less cost-effective than the GLP-1 drugs like Ozempic and Wegovy for obese patients. They cover some cancer drugs. They cover some drugs for other diseases that are not as cost-effective.

JOSH LIPTON: Dr. Emanuel, though, providing this coverage cost a lot of money, where would that money be coming from? How would North Carolina pay for that?

EZEKIEL EMANUEL: So that's a separate issue. It's not a cost-effectiveness issue, it's a budget issue. Things can be cost effective and still hit the budget hard. And I'm sympathetic to him. These are expensive. So there seemed to me to be three options. One, you could try to reduce the cost of drugs and negotiate them down.

We've had Congress, which has been sort of reluctant to negotiate a lot of drugs. We have for 2026 the first bill ever to negotiate drug prices. I think-- and I was a big advocate of that. I think that's a good thing. We could try to negotiate down these particular drugs, because they're going to be widely used.

The second approach is, look, don't just cut off a whole swath of people with one diagnosis like obesity. Use the drugs for the people who get the most benefit or who need them the most. And the third approach that we argue is, look, you want to pay for these drugs? Tax the very problem that is causing obesity, ultra-high-processed foods and soda, sugar, sweetened beverages. Tax them. Use the money you get from the text to pay for these obesity drugs.

That accomplishes two things-- you treat the people who have obesity today, and you prevent people from getting obesity by increasing the tax on these foods. That's another solution that they never even considered in North Carolina. And I think that is an ounce of prevention and the pound of cure.