On August 1, 2024, North Carolina Medicaid launched coverage for glucagon-like peptide 1 (GLP-1s) drugs for weight loss despite the State Health Plan (SHP) ending coverage on April 1, 2024. The SHP provides health care coverage to nearly 750,000 teachers, state employees, retirees, and their dependents. The cancellation of coverage was due to the prices of weight loss drugs, ranging from $1,100 to $1,400 per month, fiscally straining the nearly insolvent SHP.

In 2023, after a 40 percent rebate, the SHP spent $102.3 million on GLP-1s for weight loss, approximately 10 percent of the program’s pharmacy expenditures. Before halting coverage, the SHP was projected to spend $170 million on weight loss drugs in 2024.

GLP-1s: Type 2 Diabetes vs. Weight Loss

The FDA approved GLP-1s to treat type 2 diabetes (T2D) and weight loss in 2005 and 2014, respectively. Table 1 below depicts some of the more prolific GLP-1 drugs approved by the FDA.

It is worth noting that “off-label” prescribing, writing a prescription for an ailment other than what is approved by the FDA, accounts for 12 to 38 percent of all prescriptions. Some of the GLP-1s approved to treat T2D, such as Ozempic, are also widely known to be used for weight loss.

A natural question might be, is there a substantial difference between the GLP-1s approved to treat T2D versus weight loss? Without claiming to be a medical expert, the answer is no. The FDA includes all the GLP-1s from above in the same medicine classification and is evaluating reports of “suicidal thoughts or actions” in people taking GLP-1s. The list of drugs the FDA is examining contains every GLP-1 in Table 1.

Potential Demand for GLP-1s

According to the Centers for Disease Control (CDC), in 2021, 29.4 million adults in the United States were diagnosed with diabetes (90 to 95 percent were T2D). These diagnoses comprise 11.3 percent of the U.S. adult population, up from just 0.93 percent and 4.4 percent in 1958 and 2000, respectively. The CDC further estimated that another 8.7 million adults live with undiagnosed diabetes.

Based on reports from the CDC, from 1960 to 1962, 13.4 percent and 0.9 percent of American adults were obese (BMI = 30-39.9) and severely obese (BMI ≥ 40), respectively. By 2021 to 2023, those figures ballooned to 40.3 percent and 9.4 percent, or a total of 128.4 million adults.

GLP-1s: Medicaid’s Expenditures

As of 2023, 39 state Medicaid programs had unrestricted coverage for at least one GLP-1 drug to treat T2D. Table 2 below depicts Medicare Part D’s national gross spending on GLP-1s that are FDA-approved for treating T2D. The far-right column shows the total expenditures for each year, starting at only $188.3 million in 2012 and skyrocketing to $13.91 billion by 2022, an increase of an unbelievable 7,921 percent. During the same period, expenses on T2D GLP-1s soared from 0.2 percent to 5.8 percent of Medicare Part D spending.

The federal data on GLP-1s for weight loss spending is sparse; however, Virginia Medicaid provides quarterly reports on its total GLP-1 spending. As depicted in the graph below, Virginia Medicaid’s gross spending on GLP-1s for weight loss increased from $3.9 million to $15.63 million per quarter since 2023. At the same time, Virginia Medicaid’s gross expenditures on T2D GLP-1s increased from $27 million to $42.04 million per quarter.

The rapid increase in expenditures from GLP-1s for weight loss motivated the Virginia state legislature to increase the coverage criteria. Beginning on July 1, 2024, the baseline BMI for coverage was increased from 30 (obese) to 40 (severely obese).

Worthy of mention, this spring, a U.S. Senate Committee released a report titled “How Weight Loss Drugs Could Bankrupt American Health Care.” The report estimated that if 50 percent of obese adults are prescribed a GLP-1, the annual cost to U.S. Medicare and Medicaid, after rebates, would be $166 billion.

GLP-1s in North Carolina

North Carolina is the 17th state to provide coverage through Medicaid for at least one GLP-1 drug to treat weight loss. Optimistically, the baseline BMI for coverage was set at 30 (obese).

 In the push for coverage, the Director of the Department of Health and Human Services (DHHS) expressed that the drugs are “phenomenal” and that “I believe that they’re being held back from the people of North Carolina—when they could be promoting a great deal of value here in the buckle of the Barbecue Belt.” The director also explained to lawmakers that it will not cost the state more than $10 million annually because the federal government will pay for most of it.

The director seems to forget that state taxpayers also fund the federal government.

In July, North Carolina Medicaid provided a public notice of the estimated annual cost to state taxpayers for GLP-1s for weight loss. Without any accompanying math, facts, or logic, the one-page notice provided the following estimates:

  • Fiscal Year 2024-25 = $21,604,072
  • Fiscal Year 2025-26 = $15,763,390

Author’s Model

Table 3 below estimates North Carolina Medicaid’s annual expenditures on weight loss GLP-1s based on varying levels of participation among program recipients with a BMI ≥ 30.

Simply put, if only 5 percent of North Carolina Medicaid recipients with a BMI ≥ 30 are able to enjoy this “great deal of value,” then it will still cost state taxpayers approximately $86.25 million annually.

Policy Recommendations

  • Require the DHHS to provide quarterly reports to the public and General Assembly detailing expenditures on every GLP-1 drug authorized under North Carolina Medicaid.
  • Increase the baseline for coverage to a BMI ≥ 40 (severely obese). This will save state taxpayers millions of dollars annually and ensure that coverage is prioritized for Medicaid recipients who need GLP-1s the most.