This blog references an original article written by Mehb Khoja, Head of Large Claim Solutions at BCS, which first appeared on Forbes.com in April 2024. Read the full article here.
In April 2024, BCS Head of Large Claims Solutions Mehb Khoja penned an article for Forbes about two growing areas making waves in the self-insurance industry: GLP-1s and Gene Therapy. Flash forward one year later, and while some things have changed, these two drug classes are still areas to watch.
Take a read below (excerpted from the original article) to understand the similarities and differences between GLP-1s and gene therapy, and what’s driving concerns in self-insurance.
About GLP-1s
GLP-1s (known as glucagon-like peptide agonists) are a class of medications used to treat Type 2 diabetes. Developed to improve and control blood sugar, these drugs have recently soared in popularity, particularly for their ability to assist in weight loss. Drugs in this class include liraglutide and semaglutide, the latter of which is also known by brand names Ozempic and Wegovy, which should sound familiar if you’ve read the news or watched an interview with a Hollywood celebrity lately.
GLP-1 drugs can run approximately $1,000-$1,500 per month and can be administered via an injection at home by patients. While the costs are not too far out of line from other new prescription costs coming to market, the vast number of potential patients is what is causing concern in the self-funded industry. According to the Centers for Disease Control and Prevention, approximately 38 million people in the United States have Type 2 diabetes. Factor in the weight loss aspect, with over 2 in 5 adults with obesity, and you can see why the GLP-1 market is forecast to reach $71 billion by 2032.
About Gene Therapy
Meanwhile, gene therapy is on the opposite end of the spectrum. Gene therapy is an emerging treatment that aims to correct or edit an underlying genetic problem by modifying the gene that is missing or causing the issue. This technique can be activated through a variety of mechanisms, including replacing a diseasing-causing gene, inactivating a disease-causing gene or introducing a new or modified gene into the body. Gene therapies on the market target rare, but life-altering diseases, including hemophilia, sickle cell and beta-thalassemia.
The concern facing insurance carriers, reinsurers and plan sponsors is the price tags of gene therapy treatments. Priced at roughly $3.5 million, Hemgenix is the world’s most expensive drug, targeting the roughly 1 in 5,000 Americans with Hemophilia B. Other drugs can cost $2 million to $3 million per treatment, most requiring a transfusion in a hospital setting. Although the eligible patient pool for these drugs is relatively small, the exorbitant upfront cost is anticipated to bring an influx of claim costs the industry will struggle to absorb.
Other Similarities/Differences
Both drugs have an impact on stop-loss and large-claim trends. Because of their high frequency and low severity, GLP-1s will impact first dollar losses and aggregate trends. It is common for smaller employers (less than 1,000 employees) who self-insure to buy aggregate stop-loss insurance protection. This feature is also built into level-funded and small group captive products where first dollar risk poses a higher liability to the insurance carrier. Meanwhile, gene therapies, with low frequency and high severity, will have more of an impact on specific stop-loss insurance and reinsurance claims.
Both also have large pipelines of additional drugs anticipated in the market in the next year and beyond. Eleven weight loss drugs are in the pipeline for FDA approval, and as many as 17 gene therapies could see approval in the U.S. and Europe this year.
Another similarity is the lack of data on long-term efficacy for these drugs. In theory, the costs of these treatments should be offset by the savings from other treatments over a patient’s life—for example, savings from obesity-related care costs for GLP-1s, and no longer needing to maintain medication for a disease gene therapies have cured. Existing data looks promising, but more information may be needed to prove this hypothesis.
The bottom line is that both drugs, despite their similarities and differences, will continue to be trends to watch in the self-insurance space for years to come.
