For the last year, the health care industry has debated whether a class of drugs known as GLP-1 agonists should be covered for weight loss. While initially developed to lower blood sugar levels in people with type 2 diabetes, GLP-1s are also highly effective at helping people lose weight.
There’s no doubt that these powerhouse medications—including name-brand options such as Ozempic, Mounjaro and Wegovy—have showed promising results for obesity treatment. Studies indicate that GLP-1s can help individuals lose up to 15% of their body weight and could minimize potential side effects from obesity, such as heart and kidney problems. However, long-term results aren’t guaranteed: Many patients regain at least some of their lost weight after discontinuing the medication.
Employer Coverage of Weight-Loss Drugs
While employers typically cover GLP-1s for diabetes, not all are sold on providing them for weight loss, too. Around 40% of employers currently cover GLP-1 agonists for obesity treatment, and another 19% are considering it. Of those who plan to continue covering these medications for weight loss, a survey from Accolade found that about 75% do so to contribute to higher employee satisfaction and well-being, which could lead to lower health care costs in the long run.
The downside? GLP-1 agonists are costly, averaging more than $1,000 a month per patient. Patients also tend to take these medications for several months or years to achieve optimal results, further contributing to the already-high costs. Last year, spending on GLP-1s had a notable impact on employers’ pharmacy spend, with benefits rising 8.4% compared to 6.4% in 2022. With demand continuing to increase, employers are poised to spend even more on pharmacy coverage in 2024.
In contrast to other expensive medications used to treat rare conditions, many people qualify for the use of drugs like Ozempic to treat obesity. More than 40% of Americans are obese, according to the Centers for Disease Control and Prevention. That percentage is expected to increase to 50% by 2030. The steep price tag for GLP-1s is due to pricing, high demand and manufacturing issues, which have caused a shortage that is expected to last until the end of 2024.
The economic reality is that employers must make difficult decisions about how to cover these medications—or whether they can at all. Over time, drug companies will develop more GLP-1 medications for weight loss, and the competition will drive down prices. Until then, employers must craft a strategy to control the use of these drugs and curb spending.
How Some Employers Are Facing the Challenge
Here’s a look at what other employers are doing:
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Coverage of diet and exercise programs aimed at building healthy habits are one of the ways employers are offering their workforce an effective and affordable alternative to weight-loss medications.
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Some provide access to weight-loss drugs for employees with severe obesity or those who also participate in a diet and exercise program.
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Companies in industries with high turnover seem to be cautious about covering weight-loss medications. For example, the hospitality industry has a turnover rate of 150% to 200% each year. If employers cover GLP-1s, they risk paying for expensive coverage without seeing the long-term clinical or financial benefit.
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Mayo Clinic will limit lifetime spending on weight-loss drugs to $20,000 per health plan member in 2024.
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Some employers have decided to allow lower-cost weight-loss drugs before covering GLP-1s.
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Other large employers like Ascension are eliminating coverage of off-label use, such as prescribing the drug for weight loss, altogether.
Employer Solutions to Host a GLP-1 Town Hall
Your company’s approach to weight-loss medications should depend on several factors, including the needs of your employee population and your long-term benefits strategy. To learn more about the benefits and drawbacks of covering these weight-loss medications, register for the Employer Solutions GLP-1 Town Hall on Thursday, March 7, at 12 p.m.
