| |  | Industry Rx | So, what does this cost-benefit analysis look like? If insurers join the program, they will likely need to raise premiums to cover the added expense of these drugs. Those costs would be built into the pricing plans they submit to the federal government each year, which helps determine both premiums and federal payments. That puts plans in a tricky position. “Health plans are already dealing with an angry public upset about premium-related sticker shock,” pharmaceutical consultant Brian Reid wrote on Friday in his newsletter. “That means a tricky choice that balances the promotional advantage of covering a hot new class of drugs with the risks of passing those costs along … and the risk that plans will have to cover some of the costs.” However, plans that are “more focused on growth than affordability” could be attracted to participating in order to maintain competitiveness in the market, according to a briefing by the Advisory Board. → But a major issue for health insurance companies isn’t just the cost but also the uncertainty of not knowing how many patients will decide to use the medications. “We know what the total universe of potential new GLP-1 users could look like, but how many of those potential new users will actually begin to take the drug — even among the most sophisticated modelers — is an open question,” Conway tells me. “You’re adding additional uncertainty to pricing …. And this is a year where there’s also just general uncertainty." While the overall universe of Medicare patients who could qualify for these drugs to help with weight loss is generally under 14 million people, it’s not clear how many are enrolled in a particular plan — and whether they’ll want to begin taking the medications. And a plan’s calculations on GLP-1 uptake matters. If insurers underestimate demand, they could face large, unexpected costs. Conversely, if they overestimate it, they risk setting premiums too high and losing customers. The government’s proposed safeguards — known as “risk corridors” that protect plans from large losses due to higher-than-expected drug costs — don’t fully solve the issue, according to one insurance expert who works on behalf of the industry and granted anonymity to talk about the planning. “It does not provide a lot of additional stability for the plans to feel safe that if they get the math wrong, they will be protected,” the expert tells me. → There is an argument that the increased costs of covering GLP-1s ultimately would result in savings over time, as patients become healthier overall. But Conway, the consultant at Oliver Wyman, argues that claims data show that cost savings don’t hit in the first year people begin taking them. And insurers, particularly ones in Medicare, work in cycles that make short-term cost shifts more consequential than the commercial market. Execs at most insurance plans don’t think the 80 percent participation threshold will be met, according to the Advisory Board briefing, citing Alex Balmes of Optum Advisory. But some will choose to opt into the BALANCE model because they don’t want to be left out. What’s next: CMS wants to announce whether the BALANCE model will proceed “as soon as practicable,” the agency said. It has a target date of April 30. | 
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