A Changing Regulatory and Reimbursement Landscape for Weight-Loss Drugs

Prescriptions for a new class of drugs to treat obesity surged exponentially in 2023. Originally approved for treatment of type 2 diabetes, glucagon-like peptide-1 receptor agonist drugs (GLP-1s) such as Wegovy, Zepbound, Ozempic, and Mounjaro have been a popular choice for obesity treatment and general weight loss despite the drugs’ significant price tags and limited insurance coverage.^[1] Wegovy, Saxenda, and Zepbound are GLP-1s approved by the US Food and Drug Administration (FDA) for chronic weight management in adults,^[2] but others, like Ozempic, are being prescribed off-label^[3] for weight loss.

Some estimates project that sales of GLP-1s will exceed $100 billion by 2030.^[4] Weight-loss-medication prescribers (Prescribers), including telehealth platforms, and pharmacies should stay abreast of new and ongoing regulatory scrutiny and the changing regulatory and payor landscape of weight-loss-related prescribing. Below are some key focus areas for Prescribers and pharmacies to consider. 

State Prescribing Standards for Obesity Medication

Some states impose requirements specific to prescribing weight-loss medication. Examples of these requirements are set forth below.

Florida

Florida law restricts the prescribing of anti-obesity drugs unless, among other things: (1) the patient meets a certain body mass index (BMI) threshold (e.g., 30); (2) the patient’s informed consent is documented in the medical record; and (3) follow-up care is provided at least once every three months.^[5]

New Jersey

New Jersey law requires that in order to write a weight-loss-medication prescription, a Prescriber must: (1) take a complete patient history, conduct a comprehensive physical examination, and order or perform required laboratory and diagnostic tests; (2) assess the possible existence of psychiatric or psychological conditions, which must be evaluated and treated prior to or contemporaneous with the prescription of medications; (3) provide recommendations for nutritional counseling, behavior modification, and exercise; (4) monitor the patient’s progress at each follow-up visit (and document all of the above); and (5) obtain informed consent and identify the risks associated with such medications for the patient.^[6]

Virginia

The Virginia Board of Medicine imposes strict requirements on Prescribers, including: (1) performing a physical examination and reviewing lab results; (2) prescribing and recording a diet and exercise program; and (3) providing follow-up care within 30 days of initiating treatment and subsequently thereafter.^[7]

Prescribers should ensure they meet applicable state laws’ prescribing requirements when prescribing GLP-1s to their patients. Failure to comply with these requirements could result in discipline from licensing boards, including civil penalties and suspension or revocation of the Prescriber’s professional license.

State-Level Telehealth Prescribing Requirements

States also have varying telehealth standards that dictate, among other things, the types of providers who may prescribe through telehealth and the permissible modalities or telehealth technologies (e.g., synchronous or asynchronous) that may be used to physically examine the patient and establish a patient-physician relationship as a prerequisite for prescribing medications. 

In May 2023, the Mississippi State Board of Medical Licensure suspended a physician’s license for three months for prescribing Ozempic through an instant-messaging telehealth platform with no audio or video modalities. The board found that the physician (i) engaged in unprofessional conduct; (ii) failed to establish a valid physician-patient relationship; and (iii) used a questionnaire in lieu of a physical examination.^[8]

As weight-loss-related prescribing trends upward, state regulators are likely to continue to rely on these laws to discipline Prescribers who use telehealth platforms in a manner that does not comply with applicable state law requirements.

Payor Coverage Requirements for GLP-1s

As third-party-payor coverage for GLP-1s broadens, Prescribers will have to be mindful of third-party payors’ prior authorization requirements and coverage policies. For example, to obtain coverage of certain GLP-1s for chronic weight management, Blue Cross Blue Shield of Massachusetts imposes several requirements, including certain BMI benchmarks and documentation that the patient will use the medication as an adjunct to a comprehensive weight management plan that includes a reduced-calorie diet, increased physical activity, and behavioral modifications.^[9]

Payor and State Limitations on Off-Label Prescribing of GLP-1s

In June 2023, the Washington Post reported Anthem Blue Cross Blue Shield plans sent approximately 150 letters to Prescribers in three states warning them about prescribing Ozempic to non-diabetic patients. The letter indicated 60% of patients prescribed Ozempic lacked “sufficient evidence” of diabetes and that Anthem would refer “suspected inappropriate or fraudulent activity … to the state licensure board, federal and/or state law enforcement.”

Payor coverage of GLP-1s is often restricted to “on-label” use, so any representation that a patient meets the criteria for on-label use, if untrue or unsupported, exposes the Prescriber to potential claims of insurance fraud, which can lead to civil and/or criminal penalties. Further, state professional boards can discipline Prescribers for prescribing unsuitable medications and/or inappropriate quantities of such medications.^[10] The applicable board would generally have to find that the decision to prescribe a GLP-1 for off-label use for weight loss falls below the applicable standard of care — a high bar.

In addition, on August 29, 2023, the Mississippi Board of Medical Licensure expressly prohibited the off-label use of GLP-1s solely for weight loss based upon information it received from the FDA and the Mississippi Board of Pharmacy.^[11] Accordingly, Prescribers should follow emerging clinical research on the use of GLP-1s and track guidance issued by state licensing boards and professional associations. Compounding pharmacies should ensure they are complying with applicable requirements. State laws limited to restricting off-label use are unlikely to face challenges asserting that they are preempted by federal law, but the analysis may differ to the extent states go further to prohibit uses related to weight loss that the FDA has specifically approved for certain products.

FDA and State Limitations on Compounding GLP-1s

The increased prescribing and compounding of GLP-1s has piqued state medical and pharmacy boards’ and the FDA’s interest. For example, the Alabama Board of Medical Examiners & Medical Licensure Commission (the Alabama Medical Board) issued guidance stating that some physician offices in Alabama were improperly compounding GLP-1s (aka semaglutides).^[12] The Alabama Medical Board stated: “even when compounding of a semaglutide drug product is allowable under the Food, Drug, and Cosmetic Act, the use of semaglutide salts, the use of any non-pharmaceutical grade active pharmaceutical ingredient (API), or one not produced by an FDA-registered establishment, is prohibited.”^[13]

The Alabama Medical Board’s guidance was published in the wake of FDA communications in 2023 to the National Association of Boards of Pharmacy and Federation of State Medical Boards clarifying that FDA-approved drugs Wegovy and Ozempic continued to be listed on the FDA’s drug shortage website and that “compounded drugs can be made and distributed with fewer restrictions when the drug appears on the FDA’s drug shortage list.”^[14] Similarly, in May 2023, the FDA published an alert warning healthcare providers and patients that compounding pharmacies may be using salt forms of semaglutide and that the FDA is not aware of any such compounding that would meet federal requirements.^[15]

Counterfeit GLP-1s

The FDA has been stepping up its investigation into counterfeit Ozempic. In December 2023, the FDA announced it had found counterfeit Ozempic in the legitimate US drug supply chain and seized thousands of units of the product.^[16] In addition, the agency found the needles from seized product were also counterfeit, as well as the pen label, accompanying health care professional and patient information, and carton. The FDA has advised that retail pharmacies should purchase authentic Ozempic only through authorized distributors of Novo Nordisk and review available information and photographs to confirm the legitimacy of their shipments. Further, patients should obtain Ozempic only with a valid prescription filled by pharmacies licensed by the state and check the product for signs of counterfeiting before use.^[17]

Conclusion

The use of GLP-1s for chronic weight management has proven to be a significant medical development that will have a material impact on US obesity care and weight management for years to come; however, as GLP-1s become more widely accessible, there has been an increased focus by federal and state regulators and payors. Therefore, Prescribers, telehealth platforms, compounding pharmacies, and retail pharmacies should be mindful of the evolving regulatory framework and develop policies that help ensure prescribing, compounding, and dispensing practices (as applicable) adhere to applicable federal, state, and third-party-payor requirements.

This informational piece, which may be considered advertising under the ethical rules of certain jurisdictions, is provided on the understanding that it does not constitute the rendering of legal advice or other professional advice by Goodwin or its lawyers. Prior results do not guarantee a similar outcome.