Budget & Finance

Ozempic and Other Pricey Drugs Cause Headaches for Schools

By Mark Lieberman — March 29, 2024 5 min read
The injectable drug Ozempic is shown on July 1, 2023, in Houston.
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Casey Jakubowski, a school district administrator in rural upstate New York, has Type 2 diabetes and needs the medication Ozempic to regulate his blood sugar. But he hasn’t been able to buy it for almost four months because his local pharmacy—located almost a 30-minute drive from his home—doesn’t have it.

Instead, his endocrinologist’s administrative assistant has been scouring regional chains and other pharmacies to find stray vials. He needs 10 a month, but lately, he’s only been able to grab one or two at a time, at high cost to the district, thanks to surging demand for the drug that has made it prohibitively expensive and difficult to access.

“It’s getting to the point where if anybody says we don’t have a health-care crisis in the country, they are smoking something,” said Jakubowksi, who serves as the director of special education, instruction, and data for the 344-student Edmeston district.

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Jakubowski’s ongoing ordeal is just one of several ways in which expensive drugs, including those prescribed for diabetes and weight loss, are wreaking havoc on school district budgets and staff members.

Districts with insurance plans that cover prescriptions for pricey weight-loss medications are seeing substantial increases in the cost of premiums, amid broader worries about growing health insurance costs that threaten to overwhelm operating budgets.

In some cases, school systems have resorted to plans that source drugs from other countries to avoid passing exorbitant costs of domestic shipments to their employees.

Meanwhile, in districts where insurance doesn’t cover these medications, some staff members are facing sizable out-of-pocket costs for weight-loss drugs, even for medications that are relatively cheap to manufacture.

That’s the case in the 3,400-student Henderson school district in Texas, which recently endured a rocky statewide switch to a new insurance provider for prescription drugs. Some staff members who previously had insurance coverage for Ozempic have now found themselves unable to access it without paying hundreds of dollars out of pocket, said Amanda Wallace, the assistant superintendent of personnel and policy for the Henderson schools.

“It’s frustrating to employees that they can’t get the prescription they agreed upon with their doctor, even though they know it works for them,” Wallace said.

This change doesn’t have a direct impact on the district budget. But it’s one of many factors that’s ramped up the difficulty of finding well-qualified employees to work for the school system, Wallace said.

“Teachers are not getting what they need and not getting paid what’s appropriate to be able to sustain their families,” Wallace said. “It’s killing public education because we can’t find people to work.”

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Districts are grappling with whether and how to cover expensive prescriptions

Insurers have agonized in recent years over whether to cover the cost of prescriptions for semaglutide, the generic term for Ozempic and Wegovy, and for which uses. Some plans that cover state employees have moved away from covering them for patients who don’t have diabetes but want to lose weight.

Many districts have tried to avoid offering coverage to staff members who use Ozempic for weight loss but not diabetes, said Jennifer Dimura, Employee Benefits national director of pharmacy for Alliant Insurance Services, an insurance-brokerage firm that consults with school districts in Pennsylvania and elsewhere.

Her company is advising district clients that cover Ozempic and similar drugs for nondiabetics to “consider strict criteria that mandates active participation in a lifestyle management program as well as a higher member cost share.”

Still, she said, “if these drugs were priced more reasonably, most plans would likely be covering them.” Ozempic costs many consumers more than $900 per month, even though a recent study found an individual monthly dosage could be made for less than $5.

U.S. Sen. Bernie Sanders, the chair of the Senate committee on health and education, this week ramped up a campaign for Novo Nordisk, the company that sells Ozempic, to dramatically decrease the fees they charge consumers for their products. Sanders, I-Vt., has asked the company’s CEO to sit for a meeting next week and said he is considering holding hearings on the issue.

A spokesperson for the company shared a statement with media outlets defending the company’s efforts to bring costs down. “While we are unaware of the analysis used in the study, we have always recognized the need for continuous evaluation of innovation and affordability levers to support greater access of our products,” wrote Jamie Bennett, director of media relations and issues management for the company.

In the meantime, most districts are either absorbing the costs themselves or passing them on to staff members.

In Edmeston, for instance, staff members in the last couple years have seen health insurance premiums increase annually at a rate of 10 percent to 15 percent, far outpacing the corresponding rise in their salaries, Jakubowski said. Expensive drugs like Ozempic, as well as cancer-treatment medications, are driving some of those increases, he said.

“Every year, we lose more programming and extracurriculars because we have to pay for things like increased health care,” Jakubowski said. As a result, staff members have to pay a growing share of the costs for their health care and prescriptions.

More than one-third of school district leaders who answered a recent EdWeek Research Center survey reported their staff health insurance costs increased more than 10 percent between the previous school year and the current one. Only 1 percent said their health insurance costs had decreased by any amount.

Some districts have found viable alternatives to skyrocketing health-care costs, though. Pat Bershinsky, the executive director of the Pikes Peak Board of Educational Services, which supports 14 districts in central Colorado, became fed up a few years ago with the massive increases in premiums from his districts’ health insurance provider. So he fired it and began pursuing a health-care arrangement that’s partially self-funded and more tailored to the individual needs of participating staff.

The group’s new insurance provider contracts with another company that sources expensive prescription medications like Ozempic and Humera, which treats rheumatoid arthritis, from such countries as Australia and Canada and charges the district a flat fee of $3,000 per staff member per year. Staff members pay nothing for the drugs.

Slightly more than half of district leaders who answered the EdWeek Research Center survey said a national company serves as their district’s primary health insurance provider.

Some could replicate Bershinsky’s approach of rejecting major firms, he said. But it takes more strategic effort on the part of administrators than simply reupping with their existing insurer.

“It just takes time, a lot of work, a lot of people coming to the table to help me,” Bershinsky said.

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