Medi-Cal coverage of weight loss drugs on chopping block under governor’s proposal

Popular weight loss drugs Ozempic and Wegovy would no longer be covered by Medi-Cal under a proposal unveiled by Gov. Gavin Newsom Wednesday in an effort to reduce cost overruns in the state health insurance program.

The costly drugs prescribed to fight obesity have been driving up the cost of Medi-Cal, the state program that provides health coverage for low-income Californians. Eliminating coverage for these drugs would save the state $85 million in 2025-26, and up to $680 million by 2028-29, according to the governor’s office.

Newsom’s proposal will be taken up by the state Legislature as the governor and top legislators tackle a state budget facing a $12 billion deficit.

As proposed, coverage of the drugs would end on Jan. 1, 2026. Medi-Cal patients trying to lose weight would have to pay for the prescriptions themselves, at a cost of more than $1,000 per month, making it unattainable for low-income people.

Some health professionals say the drugs are highly effective at combating obesity, a chronic disease that drives up health care costs because it can lead to many other disorders such as heart disease and diabetes.

An estimated 18 million adults in California are obese or overweight, according to the UCLA Center for Health Policy Research.

“This is a bad decision. The people who are already taking this medication, what’s going to happen to them?” said Liz Helms, president of the California Chronic Care Coalition, a group of health consumer advocacy organizations and providers.

Dr. Wayne Ho, a Los Angeles obesity specialist and researcher, said patients will likely regain the weight they’ve lost, and also lose the health benefits they’ve gained, such as lower blood pressure and cholesterol.

“It is the best tool I have had as a primary care physician in practicing preventative medicine,” Ho said of weight management drugs. For patients on Medi-Cal, he said it can be especially difficult to access obesity specialists and nutritious foods, making their weight loss journey even more difficult.

On the other hand, the California Association of Health Plans said Newsom’s proposal “should send a strong signal to the Legislature that they should reconsider mandating that health plans cover these costly drugs for weight loss without the proper clinical safeguards in place.” 

California is not required by federal law to cover the cost of the weight loss drugs in its Medi-Cal program. Instead, the state opted to include them. Under Newsom’s proposed cuts, when Ozempic is prescribed to treat diabetes, it would still be covered by Medi-Cal.

Newsom’s proposal comes as Wegovy and Ozempic prescriptions among Medi-Cal enrollees are soaring along with overall prescription drug spending. In fiscal year 2023-24, drugs cost Medi-Cal close to $15.2 billion, according to state drug cost reports. That’s about a 10% increase from the previous year.

Between 2022 and 2023, Wegovy prescriptions in the Medi-Cal program jumped from 15,000 to 181,000, data from the U.S. Centers for Medicaid and Medicare Services show. Ozempic prescriptions for diabetes and weight loss rose from 178,000 in 2022 to 480,000 in 2023.

In 2023, the latest year for which data is available, Medi-Cal spent about $733 million on both drugs. (This amount does not include the refunds that Medi-Cal received from pharmaceutical companies as part of rebate programs.)

“This is a bad decision. The people who are already taking this medication, what’s going to happen to them?"LIZ HELMS, CALIFORNIA CHRONIC CARE COALITION In his budget presentation today, Newsom did not mention the drugs. But he said the state had to “tighten things up” in its massive Medi-Cal program so he proposed several restrictions, including a freeze on Medi-Cal enrollments by people who lack permanent legal immigration status. Medi-Cal covers nearly 15 million Californians.

Earlier this year, the state had to backfill a $6.2 billion shortfall in its Medi-Cal budget to pay providers through the end of June. The Department of Health Care Services, which oversees the Medi-Cal program, cited a number of reasons for going over budget, including the state’s expansion to undocumented immigrants and an increase in prescription drug spending.

Ozempic is primarily used to treat Type 2 diabetes, but some doctors prescribe it for weight loss, too. Wegovy is used only for weight loss. Both are manufactured by Danish pharmaceutical company Novo Nordisk, and there are no generic versions.

Semaglutide, the active ingredient in both drugs, works by mimicking the GLP-1 hormone, which helps regulate blood sugar and appetite. In an attempt to contain costs, Medi-Cal already limits the quantity of Wegovy that can be dispensed every 28 days to one carton of four pen injectors. Patients inject themselves once a week.

To qualify for Medi-Cal, a single person’s annual income cannot exceed $21,597. For a family of 4, the threshold is $44,367.

Erica Yee contributed to this report. 

This article was originally published on CalMatters and was republished under the Creative Commons Attribution-NonCommercial-NoDerivatives license.