Virtual care giant Teladoc recently expanded its telehealth services to include prescribing obesity medications as it sees opportunities in the booming weight management market.
But, the employer market continues to be in a state of flux as many organizations are taking a cautious approach to covering newer obesity drugs such as GLP-1s, short for glucagon-like peptide 1 agonists.
Up until recently, Teladoc was offering provider-based care services to diabetes and hypertension patients. During the third quarter, the company expanded this service for employers to include weight management and prediabetes programs.
"Certainly the introduction of provider-based care to our weight management program and especially diabetes prevention, that is absolutely in response to the proliferation of GLP-1s," Teladoc CEO Jason Gorevic said during investment bank Piper Sandler's healthcare conference this week.
"We’re seeing a few things that are notable. First of all, the entire gamut of experiences with respect to coverage, non-coverage, on formulary, off formulary and specifically whether people are fully embracing it," he said. "Some employers are saying 'We’re all in with GLP-1s and we think it's great for our employees' and others are saying, 'I’m terrified of the long-term cost of these medications' and then everything in between."
According to a Mercer survey in September, fewer than half of large employers (42% of those with 500 or more employees) currently cover GLP-1 medications for treatment of obesity, although another 19% say they are considering it.
GLP-1 medications, originally designed for diabetes management, have skyrocketed in popularity over the past year as effective drugs for weight loss and obesity. But medications like Ozempic and Wegovy come with a hefty price tag, at least $1,000 per month. Neither drug is covered for weight loss by most insurance plans.
Employers are bracing for health benefit costs to grow by 5.4% next year and see ultra-pricey drugs as key factors pushing up costs overall.
Teladoc's provider-based care program for weight management is designed to help members lose weight and prevent and manage diabetes by safely optimizing medications, such as GLP-1 agonists, working in conjunction with solutions and tools that address the foundational pillars impacting cardiometabolic health, the company said. The company's program includes nutrition logging and coaching, activity tracking, sleep management, and stress and mental health tools and virtual care.
"I think the people coming to us for solutions recognize a couple of things: One, that GLP-1s, by themselves, are not a panacea that is sustainable from a cost perspective," Gorevic said at the Piper Sandler event. "They recognize they have to have behavior change, especially diet, nutrition and activity, in order to make this a sustainable program where someone can go on a GLP-1 and engage in significant lifestyle changes and then wean off those very expensive medications."
He added, "I talk to CEOs all the time who say, 'I expect my cost of GLP-1s to double and triple next year' and that just can’t be sustainable. They are coming to us for the broad set of capabilities that we have as a companion to a shorter duration on GLP-1s."
Employers and health plans also are looking at putting systems in place, such as prior authorization, that can better manage the cost around these drugs.
"We're seeing health plans who are saying, 'In order to get coverage to begin with or sustain coverage over time for these medications, someone has to engage in your weight management and/or diabetes prevention program and we need proof that they are engaging in the long term so it’s not just a drug as the silver bullet'," Gorevic said.
"That's where we can play a significant role in the market and help our clients do what they are looking for from all of our programs which is improved clinical outcomes and containing their costs," he added.
The American Medical Association this month passed a resolution supporting coverage for "evidence-based treatment of obesity, including FDA-approved medications without exclusions,” which will put more pressure on insurers and employers.
Back in April, Piper Sandler analyst Jessica Tassan told Reuters that Teladoc's expansion into obesity drugs could unlock a $200 million or more revenue opportunity for the company.
But, Gorevic downplayed the impact of GLP-1 drugs on the growth of Teladoc's weight management program.
The company currently has 90 million integrated care members which gives it a sizable reach into the employer market.
During the Piper Sandler conference, Gorevic declined to "get out his crystal ball" to predict how many members will be on GLP-1s in 2024.
"There is a lot that is evolving right now. A lot of it will depend on what the cost of medications looks like over time and that will impact what’s the treatment of health plans and employers relative to their formularies and their benefit structures and those are going to have an impact on how many people engage with them," he said.
The telehealth giant, which has been in operation for 20 years, is focused on providing integrated, "whole person" care spanning chronic conditions, mental health and virtual primary care to boost its growth in a highly competitive telehealth market. The chronic condition management segment of Teladoc's business grew 13% year-over-year in the third quarter.
"People ask me, what will you be surprised about the business five years from now. I think you’ll be surprised when you ask people where they get their healthcare and their answer is Teladoc; not where you get your diabetes management program, not where you get your virtual urgent care, not where are you going for your virtual mental health care, but where are you going for your healthcare? Who is your healthcare partner writ large?" Gorevic said. "That's the role and opportunity the integrated care business has to play in the healthcare system."
He added, "It's almost this uber, multi-specialty clinic without walls that can be ubiquitous across the country and across clinical specialties and that is the vision for our whole person care."