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Many American workers want to use GLP-1 drugs, like Ozempic, to meet their weight loss goals. The trouble is, most employee health plans don’t cover them — but a new company hopes to change that.
A prescription drug employee benefit company, called Andel, announced its debut at the HLTH conference in Las Vegas on Monday. Early next year, Andel will help reduce the cost of providing GLP-1 medications in employee benefits packages by forming an employer co-op. Under this setup, Andel is able to buy the medication in bulk directly from drug manufacturers instead of negotiating prices from pharmacy benefit managers, which are usually owned by insurers. Employers can reduce the cost even further by adding subsidies.
“Instead of asking [employers] to sign up to a fully-funded insurance plan, which is really expensive and unpredictable and challenging, all we would ask for is a small 50 to $100 per claim subsidy, which we pass directly to reduce the cost of the drugs,” Andel CEO and Co-founder Jay Bregman says.
Employers are legally required to cover GLP-1 medication for diabetes, but not for weight loss. The injectable version of the drugs typically costs between $1,000 and $1,500 a month — which isn’t doable for most employers, especially with premiums projected to spike by 9 percent next year. Currently, 64 percent of employers do not cover GLP-1 medication to help workers shed pounds — but boy, do they wish they did. Up to 35 percent of Americans say they “are interested” in using the drug to lose weight, according to a PwC survey.
Lesley Grady, senior vice president of enterprise marketing at Sequoia — a benefits brokerage known for serving Silicon Valley tech startups and large companies — confirms strong interest in GLP-1 coverage. She says their clients are looking for creative solutions to make the medication more affordable for employers. The brokerage plans to start offering Andel to clients who are looking to beef up their benefit plans.
“Employees in tech have high expectations of their benefits, but I think employers obviously know that if they include it with unchecked access, it will blow up their budget,” Grady says. “So they’re really under pressure to find solutions right now that don’t just open up their floodgates — we see that strategy with Andel.”
Andel doesn’t plan to stop with weight loss drugs — in the coming years, the company hopes to apply the same cooperative, subsidy model to preventative Alzheimer’s drugs and potentially gene therapy, the co-founders told Inc.
“Expanding access to healthcare is the cornerstone of our mission,” says Andel Co-founder Ritu Malhotra. “Andel gives employers an innovative new pharmacy-benefit solution that fills the coverage gap.”
Andel was co-founded by Bregman, who successfully exited three companies — including the ridesharing network Hailo, rebranded to Lyft Europe — and Malhotra, who’s also a pharmacist and former CVS Health executive. At the conference, the founders announced they raised $4.5 million in capital to launch the platform. Investors include Lightbank, Seedcamp, Bertelsmann Investments, Houghton Street Ventures, and Springboard.
Eric Ong, partner at Lightbank — a venture capital firm that invests heavily in benefit tech companies — told Inc. that Malhotra’s PBM experience and Bregman’s entrepreneurial success is uniquely positioned to help tackle the high cost of in-demand prescription drugs. The firm invested in the company because they haven’t seen any other solutions addressing this challenge, he says.
“There’s a disconnect between employers wanting to offer good benefits and health benefits and keeping their employees healthy — at the same time, they can’t afford it. So, we just found that really interesting and sort of novel in the market today,” Ong says.
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Kayla Webster
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