In a significant development, North Carolina’s State Health Plan has reached a new agreement with CVS Caremark, enabling direct negotiations with manufacturers of GLP-1 medications. This move marks a pivotal effort to restore coverage for thousands of members who previously benefited from these weight loss drugs.
Last April, the N.C. State Health Plan ceased coverage of GLP-1 medications for weight loss, affecting approximately 23,000 members. These drugs, although effective, were costing the plan over $800 per member monthly after rebates. Projections indicated that annual spending could escalate from $170 million in 2024 to over $1 billion by 2030.
This new agreement is part of a broader strategy led by State Treasurer Brad Briner. It is anticipated to yield substantial financial benefits for the 750,000 state employees, retirees, and their families under the plan.
Previously, the State Health Plan faced a binary choice under its agreement with CVS Caremark: provide GLP-1s to all members for weight loss or not at all. Given the financial constraints and the rising premiums, the plan opted for the latter. “There is an intermediate answer between those two extremes, but unfortunately the contract didn’t permit it, so that’s what we’ve negotiated,” Briner explained.
While the new agreement is promising, GLP-1 medications remain accessible to those using them for diabetes treatment. The drugs are manufactured by Novo Nordisk, under the brand names Ozempic and Wegovy, and by Eli Lilly, under Mounjaro and Zepbound.
Initial discussions with manufacturers post-agreement indicate a promising path forward, though Briner describes them as “very preliminary.” Additionally, the N.C. Senate’s budget proposal earlier this year included a $95 million allocation to provide GLP-1 drugs to members with a body mass index of at least 38, but the budget remains in a legislative stalemate.
Adam Wagner
/
N.C. Newsroom
Besides medications, the State Health Plan is exploring comprehensive strategies to help members manage weight. With approximately 125,000 obese members, Briner envisions a weight management program similar to those in the corporate world, such as AT&T’s, which includes regular participant check-ins. “What we want to do is invest in those who are really willing to invest in themselves,” said Briner, emphasizing a holistic approach beyond just medication.
These new initiatives, including the GLP-1 agreement and weight management program, are expected to come to fruition by 2026, according to Briner.
The CVS Caremark Agreement
Under the recent agreement with CVS Caremark, North Carolina’s State Health Plan is set to benefit from significant financial gains. The plan will maintain control over the formulary, the list of medications available to members.
Ed Devaney, CVS Caremark’s president, stated, “We remain laser focused on lowering drug costs, delivering value, driving innovation and providing transparency across our customers’ pharmacy benefit.”
The agreement also addresses payment structures for generic drugs produced by CVS Health subsidiary Cordavis. Cordavis collaborates with manufacturers to create generic versions of complex drugs, such as Hyrimoz, a biologic analog of Humira.
The previous rebate structure had disincentivized Caremark from offering its own generics, but the revised agreement changes that, making it more financially viable to distribute generics over branded alternatives. “If you’re the branded pharma person, you’re the loser in this conversation, but the PBM and particularly the State Health Plan are better off,” Briner noted.
Caremark has served as the State Health Plan’s pharmacy benefit manager since 2017, with the current contract extending through 2027.
