2 NC Republicans clash over why the State Health Plan cut coverage of Wegovy, Saxenda

Two high-profile Republican politicians in North Carolina are butting heads over why the State Health Plan was unable to maintain coverage of popular weight loss drugs, as well as the cause of the plan’s financial woes.

The State Health Plan voted in January to no longer cover Glucagon-like peptide 1 (GLP-1) agonist medications for weight loss for state employees on the plan starting in April.

This cut access to weight-loss drugs Wegovy and Saxenda, manufactured by Danish company Novo Nordisk. It also cut access to Zepbound, manufactured by U.S. company Eli Lilly and Co.

The two politicians are House Speaker Tim Moore, who has led the House for over a decade, and State Treasurer Dale Folwell, a Republican who ran unsuccessfully for governor and is capping off his last year in the role. Moore is running for North Carolina’s 14th Congressional District seat.

This is not the first time that Folwell and Moore have been at odds. Folwell criticized GOP-sponsored legislation passed into law last year, including a law cutting regulations on the state’s largest health insurer, Blue Cross Blue Shield of North Carolina.

And the state House led by Moore tried to block one of Folwell’s signature initiatives. Moore now blames that project for higher costs.

Moore says Folwell is ‘scapegoating’ weight loss drugs

Moore wrote a letter to U.S. Sen. Ted Budd on statements by Folwell about the State Health Plan, including those Folwell made during a forum held by U.S. Sen. Bernie Sanders of Vermont on Sept. 17 on the high cost in the U.S. of the popular weight-loss drugs. Sanders is an independent who caucuses with Democrats.

During the forum, Folwell said that the State Health Plan’s board of trustees “had to make the awful decision to stop covering Wegovy” and that before ending coverage “we had 23,000 users of Wegovy on the State Health Plan, which had the potential of costing nearly $170 million a year” in 2024, Folwell said.

The SHP has previously said the cost would have jumped to more than $1 billion over the next six years.

“That’s why we had to make the decision, because our plan is insolvent,” he said.

Moore took issue with this characterization, saying in his letter that Folwell is “scapegoating anti-obesity medicine coverage as the reason for the financial problems” while ignoring the real data” on “the cost drivers for the State Health Plan.”

“Even worse, he has advocated for a solution that is tantamount to a socialist takeover of the pharmaceutical industry,” he said in his letter, dated Sept. 23, urging Budd to focus on “problems created by government overregulation and the so-called ‘Inflation Reduction Act.’”

Moore referenced Folwell’s attendance at Sanders’ forum that “advocated for government price controls and the redistribution of privately owned intellectual property through compulsory licensure.”

“Reckless ideas like these would destroy companies that have invested billions of dollars in North Carolina,” he wrote, likely referencing Novo Nordisk’s announcement in June that it was investing $4.1 billion to build a new facility in Clayton.

Budd shared excerpts of Moore’s letter during a Senate Health, Education, Labor & Pensions committee hearing on Sept. 24, which largely centered on the role of pharmacy benefit managers (PBMs) on drug prices in the U.S. This was despite Sanders – who is the chair of the HELP committee – making efforts to focus on the role of Novo Nordisk’s CEO Lars Fruergaard Jørgensen, who was there as a witness.

Folwell told Moore that the speaker lacked information.

“Given the nature of your recent letter to Senator Budd, it appears that certain details regarding the Plan’s challenges and the rationale behind recent decisions may have been overtly misrepresented or at the very least grossly misunderstood,” wrote Folwell in his letter, which was sent to Moore and Budd on Monday afternoon, according to SHP spokesman Frank Lester.

Folwell said Moore pushed legislation to “torpedo” a key solution to high costs.

”It’s my observation that the fingerprint that has stopped the progress that we have needed to take in the State Health Plan in order to make it solvent and affordable for our state employees is his,” Folwell told reporters in response to a question from The News & Observer.

Touching on the unconventional alliance between himself and Sanders, Folwell said “any elected official at any level who refuses to talk to anyone else about how to actually solve a problem, should resign.”

A spokesperson for Moore did not reply to a request for comment on Folwell’s letter on Monday.

What’s behind the higher costs?

Moore wrote in his letter that the loss of coverage for weight loss drugs is due to Folwell’s failure to work out a deal with pharmacy benefit managers. He also blamed increased Medicare Advantage costs for the plan’s financial problems.

Insurance companies and state health plans use PBMs as middlemen to negotiate drug prices with pharmaceutical manufacturers. PBMs negotiate a rebate rate with drug manufacturers, who then reimburse the rebate after prescriptions are filled. The PBM then passes all or a portion of rebates to insurers and health plans.

During the State Health Plan’s most recent board of trustees meeting in July, the plan’s staff forecasted the plan to be $816 million in the red by calendar year 2027 with the plan “likely to be unable to pay bills in fall 2026.” During the next board of trustees meeting in October, staff is expected to present options for addressing the budget shortfall.

These shortfalls come despite the plan ending coverage of the GLP-1s and despite the board in June voting to increase premiums next year for some retired state employees and their dependents under the State Health Plan’s Medicare Advantage plans.

State Health Plan staff members said in June that Humana — which administers the Medicare plans — had originally offered a zero-dollar premium to the plan for all years, barring significant federal regulation changes. But the federal Inflation Reduction Act in 2022 implemented changes that Humana has said require increased costs, staff members said.

But without the GLP-1 exclusion — and prior to costs increasing under Medicare Advantage — the health plan was projected to be over $1.5 billion in the red by calendar year 2027, according to SHP staff calculations from April.

Also causing shortfalls was underfunding by the General Assembly, wrote Folwell, who wrote that the budget passed by the legislature last year funded the plan by $240 million less than what the plan “needed.”

In terms of PBM negotiations, the State Health Plan in January lost a 40% discount for Wegovy and Saxenda prescriptions after it imposed a moratorium on new prescriptions for Wegovy, when made solely for weight-loss purposes. CVS Caremark, the plan’s PBM, told the plan that it had violated terms and conditions for discounts, as previously reported by The N&O.

Prior to that, the SHP staff said it had proposed more than 10 ways they could rein in spending on drugs like Wegovy, as previously reported by The N&O.

Folwell referenced these failed negotiation attempts in his response to Moore, saying “because supply of GLP-1s is still limited, drug manufacturers hold immense power and consistently wield that power to prevent any savings.”

Ultimately, the plan opted to cut access. There has not been a breakthrough reported since, with a new treasurer slated to take over the plan next year after the November elections.

Clear Pricing Project

Moore also blamed the plan’s financial struggles partly on Folwell’s initiative known as the Clear Pricing Project.

Folwell implemented the project in 2019, taking the power to negotiate reimbursement rates for services away from hospitals and setting those rates based on what Medicare pays providers, plus a markup. Folwell says in his letter the state’s CPP pegs to 160% of Medicare payments.

Visits by State Health Plan members who select providers in the CPP network as the primary care provider, or who visit a CPP behavioral health provider, are free.

Most hospitals and providers did not join the pricing project and were allowed to remain under their previous Blue Cross Blue Shield contracts, without becoming out of network.

Blue Cross NC is the state’s current third-party administrator of the State Health Plan. Next year, Aetna is slated to take over this contract.

New rates represented an increase in payments to those providers who signed onto the new network but a “substantial cut” in payments to for hospitals throughout the state, Moore said. He referenced and attached a report by Segal Consulting, the plan’s actuary, that estimated a cost for the CPP of $50 million for 2020 and 2021.

In 2019, after the announcement of the Clear Pricing Project by Folwell, lawmakers introduced House Bill 184 with the support of the North Carolina Healthcare Association, which represents hospitals. That bill — which passed the House but died in the Senate — would’ve frozen the plan and crated a committee to study spending issues with the SHP.

“Although the Plan assumed that the additional cost would eventually be eliminated, there is every reason to believe that it persists given that there has been no significant change in the makeup of the network,” Moore said.

Folwell said data shows members who engaged with CPP providers “are healthier,” and “have significantly lower health care costs than those who do not receive regular care, thus benefiting members while resulting in saving the Plan.”

The News & Observer requested data on how much — if that’s the case — the CPP plan is costing the state. Lester said there was “no update to the Segal analysis” but “staff believes that CPP’s focus on primary care physicians (PCP), and the subsequent increased adherence of members to seeing their PCP, presents real savings to the Plan and its members.”

That additional $50 million represents a significant portion of the cost of the weight loss drugs Folwell “claims have the potential to bankrupt the State Health Plan,” said Moore.

Folwell, meanwhile, said that “instead of helping us to place the Plan on better footing, you prefer to call me a socialist while I seek creative solutions to the Plan’s problems. As I have repeatedly noted, no more juice remains in the squeeze for the Plan to solve its financial problems on its own.”

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