North Carolina’s health insurance plan for state employees recently opted to stop covering popular new weight-loss drugs amid fears that costs could balloon to more than $1 billion over the next six years.

The 750,000 public employees enrolled in the plan must now pay out of pocket if they want to take Wegovy and a similar drug, Saxenda. And the state, the drugmakers and the company that manages the plan’s pharmacy benefits are all blaming each other.

What happened in North Carolina is playing out across the U.S. as large employers try to limit the costs of the expensive new generation of weight-loss drugs. And it is exposing how the U.S. drug pricing system, which gives manufacturers a lot of clout, can end up keeping patients from gaining access to highly effective treatments.

North Carolina initially wanted to save money by limiting prescriptions to patients who first tried lifestyle management programs to lose weight. But the manufacturer and the state’s pharmacy benefit manager, CVS Caremark, said the state would have to pay full list price for the drugs unless it agreed to allow all patients with a prescription to get the drugs without any preliminary hurdles — in which case the state could get rebates amounting to a 40 percent discount.

That’s when the state plan’s board voted to stop covering the drugs.

“The contracts between the manufacturers and the [pharmacy benefit managers] are all-or-nothing,” said Sam Watts, the administrator of the North Carolina State Health Plan. “I’ve got to take it or leave it. I have to pay for everybody, even the folks for whom it is not cost effective in order to get it for the folks it would be cost-effective for.”

Employers and health care economists say drug companies are more than willing to play hardball — even if it means losing some short-term business — to stop employers from imposing restrictions that could, over the long term, crimp sales.

according to the Centers for Disease Control and Prevention. Large employers across the country have faced similar resistance from pharmacy benefit managers and drugmakers when implementing lifestyle management programs to cut down on the costs of weight-loss drugs, according to large employer coalitions.

“What we see in any market where there’s a few organizations dominating it is, often, it is the patient that loses out or in some cases the payer, too; in this case it might be the employer or the state plan,” said Cynthia Cox, vice president at KFF, a health policy think tank. “Employers are having to balance this desire from their employees for this kind of benefit with the really unpredictable and often high costs that can come with offering a blockbuster drug like this.”

Other large employers across the country have started offering limited coverage of the drugs in the face of high costs. Some, like the state of Connecticut and Labcorp, a laboratory services company, have opted to implement clinical lifestyle programs that offer access to providers and personalized care plans for weight management. Others, like Purdue University, are requiring employees to meet a certain body mass index threshold to qualify for drug coverage.

The goal of lifestyle management programs is often to cut down on the number of employees who are prescribed medications like Ozempic and Wegovy, which come at a price tag of about $1,000 a month per patient. The programs can also help employees maintain long-term lifestyle changes while allowing employers to realize the massive health care savings to be had from reducing obesity.

according to a Mercer survey on employer-sponsored health plans.

The costs of the drugs are too high for some employers to start covering them — or to maintain full coverage if they already offer them. About 40 percent of employers cover the drugs for the treatment of obesity, often with some limits, according to the Mercer survey. Another 19 percent say they are considering offering some form of coverage. Most plans cover the drugs for diabetes, not weight loss.

“Self-insured organizations should have the opportunity to adjust their benefit plan design and coverage criteria without having a negative impact on a medication’s price,” said Randa Deaton, the Purchaser Business Group on Health’s vice president of purchaser engagement. “Most organizations want their plan members to have access to weight-management options, however, they also want to ensure that it’s clinically appropriate and accompanied by the medical and lifestyle modification supports to ensure long-term safety and efficacy for the individual.”

Shawn Gremminger, the president and CEO of the National Alliance of Healthcare Purchaser Coalitions, said what’s happening in North Carolina is an example of conversations employers across the country are having with drug manufacturers and PBMs as they look to offer coverage of the weight-loss drugs in a cost-effective way.

“Anytime you’re structuring any sort of benefit, one side is going to try to get as much money as they can, and it’s the employers’ job to try to protect themselves and spend as little as they can for access to the thing that they want,” he said.

But if drug companies don’t lower the prices of the drugs or allow employers to put limits on who can receive coverage for the medication, employers might be forced to scrap all coverage, like North Carolina did, said Gelfand, head of the ERISA Industry Committee.

“If what happened in North Carolina is the rule and not an exception, and if the drug companies made this decision that ‘we’re not going to allow these drugs to be paired with behavioral modification,’ employers are not going to cover these drugs,” he said. “Because the loss of all the rebates makes the price too crazy.”