Congress Cuts PBM Reform from CR, Novo Nordisk’s Zepbound Rival Stumbles, and IBX Drops Weight-Loss Drug Coverage
Welcome to PoundsPunch’s Periodical of December 2024. In this month, you will find:
1 Regulatory & Government Updates
PBM Reform Stalls: Congress Cuts Restriction Proposals at the Last Minute from CR
Congress had been working on reforms to rein in pharmacy benefit managers (PBMs)—those middlemen who negotiate drug prices between manufacturers, insurers, and pharmacies—but things didn’t go as planned. A set of proposals aimed at making PBMs more transparent and less costly for consumers got dropped from the year-end government funding package (called CR) at the last minute.
These reforms had big goals: they wanted to ban PBMs from using "spread pricing”, where they pocket the difference between what they charge insurers and what they pay pharmacies. They also aimed to require PBMs to pass through all discounts to Medicare and Medicaid, and make pricing in commercial insurance more transparent. Advocates say these changes could have saved taxpayers billions and reduced the overall cost of prescription drugs.
The failure to pass these reforms has been called a "missed opportunity" by groups like the National Community Pharmacists Association. They argue that Congress backed down under pressure, leaving PBMs free to continue their controversial practices, which many blame for keeping drug prices high.
Even though there’s bipartisan support for PBM reform, it’s clear this fight is far from over. Lawmakers and advocates for change are likely to push for these reforms again, but for now, the PBM system remains as it is—opaque and widely criticized.
PoundsPunch Comments:
I’m no expert in Congressional budget planning, but I find it fascinating how a Continuing Resolution (CR)—which is supposed to be a simple, drama-free extension of the 2024 budget—ends up packed with so many "extra ingredients." It’s called a CR for a reason. It’s not the actual 2025 budget; it’s just a quick bandage fix. Yet here we are, watching Capitol Hill turn it into a chaotic blend of conflicting agendas, with lawmakers more focused on one-upping each other than seeing the bigger picture.
Take PBM regulation, for example. It’s important—absolutely—but it deserves its own process. Smushing it into a CR, along with who knows what else, makes it impossible to properly evaluate or debate. Our brains aren’t built to process a giant grab bag of unrelated issues and find an optimal outcome. CR isn’t an inventory clearance where you can bundle unrelated items as part of a deal. It’s no wonder nothing gets done when too much is thrown into one bucket.
Don’t get me wrong—I think PBMs have serious problems. Adding an extra layer of middlemen who are FOR PROFIT, often tied to publicly traded companies, creates a conflict of interest that’s hard to ignore. These companies are accountable to shareholders and Wall Street, not patients or taxpayers. With three major PBMs controlling nearly the entire market, they’ve become a bottleneck—and an expensive one at that. This kind of setup doesn’t just hurt individuals; it threatens to bankrupt the healthcare system in the not-so-distant future. It’s a problem that desperately needs fixing, but maybe not in the middle of a CR circus.
2 Manufacturer’s Corner
FDA Ends Eli Lilly’s Weight-Loss Drug Shortage and Approves Sleep Apnea Treatment, But Novo Nordisk Stumbles with Supply Woes and a Trial Letdown
On December 19, 2024, the FDA officially ended the shortage of tirzepatide, the powerhouse ingredient behind Eli Lilly’s weight-loss and diabetes superstars, Mounjaro and Zepbound. After months of scrambling to meet demand, Lilly has finally caught up. But with the shortage over, compounded versions of tirzepatide—cheaper alternatives many relied on—are no longer permitted. For some, this means relief; for others, it’s a return to higher costs and fewer options.
That’s not all for Lilly. The FDA also approved Zepbound to treat obstructive sleep apnea in obese adults. This was unexpected but not surprising as sleep apnea’s correlation with obesity. In clinical trials, patients treated with Zepbound saw their Apnea-Hypopnea Index (AHI)—a key measure of sleep apnea severity—drop by an average of 50% over 24 weeks. Nearly 60% of participants experienced significant symptom improvement, compared to only 18% in the placebo group. This marks the first time a drug has been approved for OSA, offering a potential alternative for patients who have struggled with CPAP machines or other traditional treatments. It’s another sign of how these drugs are expanding beyond just weight-loss treatment.
Novo Nordisk, on the other hand, isn’t having the best time. Ozempic and Wegovy are still in short supply, forcing Novo to prioritize diabetes patients and limit new weight-loss prescriptions. Pharmacies are running out, patients are waiting, and frustration is building.
Adding to Novo’s challenges, CagriSema—a contender to Lilly’s Zepbound, didn’t deliver the news they were hoping for. This next-gen weight-loss drug combines semaglutide, a GLP-1 receptor agonist, with cagrilintide, an amylin analogue, to amp up weight loss. While trials showed 22.7% average weight loss over 68 weeks—better than the individual components—it missed the anticipated 25% mark. Plus, only 57% of participants tolerated the highest dose, with side effects like nausea and vomiting raising questions about how practical it’ll be for a wider audience. It’s not the game-changer Novo was banking on.
While CagriSema’s trial results were a disappointment, Novo’s supply challenges remain its most immediate problem. The company is pouring $11 billion into new manufacturing facilities to boost production for Ozempic and Wegovy. But factories don’t pop up overnight, and pharmacies are still seeing uneven stock. With Lilly now back on track and even branching into new treatment areas, Novo’s got a lot of ground to cover if it wants to stay in the race.
PoundsPunch Comments:
Novo Nordisk is certainly facing some headwinds lately. Their stock has taken a hit, dropping nearly 21% after the CagriSema trial results, wiping out about $100 billion in market value.
But let's not count them out just yet. In the weight-loss drug arena, it's pretty much a duopoly between Novo and Eli Lilly, with no strong newcomers in sight. Novo has several levers to pull to regain its footing. They're investing heavily in manufacturing——which should help alleviate supply issues. Plus, they're exploring new drug formulations and expanding into emerging markets like India, where there's a gigantic demand for weight-loss treatments.
Let's not forget the policy landscape. With a new administration in place, changes in healthcare policy could impact drug coverage and pricing, potentially leveling the playing field. So, while Novo's facing challenges, it's too early to say they're out of the game. They've got options and time to turn things around.
3 Insurance & Employer
Independent Blue Cross Stops Covering Weight Loss Drugs
Starting January 1, 2025, Independence Blue Cross (IBX), Philly’s largest health insurer, will stop covering weight-loss drugs like Ozempic and Wegovy when they’re prescribed just for shedding pounds. That means members looking to use these meds for weight management will now have to pay out-of-pocket—costs that can hit $900 to $1,800 per month.
IBX says it’s all about keeping premiums under control. With these drugs costing nearly 10 times more in the U.S. than elsewhere, the insurer argued that covering them for weight loss could hike up costs for everyone. They’re still covering the meds for diabetes and other FDA-approved uses, though, as long as members meet prior authorization requirements.
This move isn’t unique. Other insurers, like Blue Cross Blue Shield of Michigan, have announced similar changes. It’s part of a bigger conversation about whether weight-loss medications should be treated like specialty drugs or lifestyle choices.
For those affected, it might be time to chat with your doctor about other options—or start exploring ways to use HSA or FSA funds to ease the financial hit. Eli Lilly’s direct sale platform—Lilly Direct, might also be an option where a monthly supply of Zepbound will cost as low as $399.
PoundsPunch Comments:
It’s no shock that more American health insurers, like Independence Blue Cross, are stepping away from covering weight-loss drugs. The prices they’re dealing with are set by pharmacy benefit managers (PBMs) like CVS Caremark and Express Scripts. Insurers don’t have a direct line to negotiate with the pharmaceutical companies themselves. Add an extra middleman to the mix, and of course, costs stay high—more mouths to feed, more profits to chase, and little room for meaningful price cuts.
This isn’t just about PBMs, though. Insurers are also walking a tightrope between running a business and providing a service that, for many, is a matter of life or death. Even for companies still covering weight-loss drugs, prior authorization exists as a giant hurdle. It’s a system that often seems designed to look for reasons to deny coverage rather than approve it—and trust me, this isn’t just a weight-loss drug problem. It’s the same story across countless treatments.
For now, these drugs remain in high demand and short supply, but affordability and access are challenges insurers haven’t yet figured out how to navigate in a way that feels fair for everyone involved.
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