Here’s How Much GLP-1 Drugs for Weight Loss Are Amounting To in Employer Claims
Dec 07, 2023
Since blockbuster GLP-1 drugs like
Ozempic and Wegovy burst on the scene as a weight-loss aid
phenomenon, employers have been mulling whether or not to cover their costs for
employees. Now a new survey of employers reveals just how many are covering
these drugs for weight loss—and how much they are paying.
The majority of organizations (76 percent) provide GLP-1 drug
coverage for diabetes—the original intended use for drugs including Ozempic—far
outpacing the percentage of those providing coverage for weight loss, according
to a new survey of 200 employers from the International Foundation of
Employee Benefit Plans (IFEBP). But momentum is spreading: While only 27
percent provide coverage for weight loss, 13 percent are considering doing so.
In 2023, the average representation of GLP-1 drugs used for
weight loss in employers' total annual claims was 6.9 percent, employers told
IFEBP. Employers that are covering GLP-1 drugs are relying heavily on
utilization management (79 percent) to control costs. A less common approach
(32 percent) is step therapy, while 14 percent of employers have no cost
control mechanism in place.
The new data may encourage more organizations to add coverage,
said Julie Stich, vice president of content at IFEBP.
"Though GLP-1 drugs have a high price tag, they currently
represent [a small amount] of annual claims, according to survey
respondents," Stich said. "Employers can take this information into
account when designing long- and short-term benefit strategies."
The findings from IFEBP come as demand for the drugs continues
to grow. Earlier this month, the FDA approved a new Eli Lilly drug, Zepbound
(tirzepatide), for chronic weight management in adults who have at least one
weight-related health condition. And current data reiterates the potential
benefits of GLP-1 drugs for weight loss, with a recent study finding that
medications such as Wegovy that are prescribed for weight loss may reduce the
risk of heart attack, stroke or heart-related death in people with
cardiovascular disease.
Despite some excitement in the workplace about making an impact
on employees' weight and overall health with the medications, many employers
are still cautious about the high costs associated with the drugs, which
average more than $1,000 per month. That and unknowns such as
potential negative side effects are keeping many organizations in
wait-and-see mode.
Stich said price—"both the immediate costs and the
potential for long-term costs if employees need to stay on the drug for longer
periods of time"—is undoubtedly one of the major considerations for employers
thinking about GLP-1 coverage.
Indeed, nearly 4 in 10 HR leaders (38 percent) surveyed by health care firm Accolade this fall cited
the costs associated with GLP-1s as a potential barrier to providing coverage,
while another recent survey by Virta found that the high costs of GLP-1s,
driven by an anticipated rise in utilization, are a concern for the vast
majority (72 percent) of health plan leaders.
"Employers are looking at how the cost of the drug compares
to potential costs that could arise from obesity comorbidities like
hypertension, heart disease, Type 2 diabetes and some cancers," Stich
said. "Meanwhile, employers are still grappling with unknowns associated
with GLP-1 drugs, namely side effects and still-emerging long-term clinical
studies, and the effectiveness of cost control tools like prior authorization
and step therapy."
But as evidence of the benefits of using the drugs for weight
loss continues to grow, along with increased employee demand, it looks like
many employers might add coverage.
Nearly half (43 percent) of employers plan to cover the
weight-loss drugs in 2024, almost double the share of employers that cover them
now (25 percent), Accolade found in its recent survey. The survey of 500
employers found that most human resource decision-makers are open to adding
GLP-1 medications to their benefits package, with 81 percent reporting that
their employees would be interested in GLP-1 medications.
The anticipated spike is likely the result of high interest
among employees, as well as potential boons to employers in the form of
healthier workers. Providing access to the medications could also be a
recruitment and retention tool, said James Wantuck, M.D., associate chief
medical officer at Accolade.
"With the recent spike in demand surrounding these
medications, HR decision-makers feel it will create a better health insurance
package overall for employees, as well as boost their mental and physical
health long-term," Wantuck told SHRM Online last month, noting that more than
two-thirds of companies that added GLP-1s to their health care offerings
experienced an increase in enrollment.
"For companies who are already offering this medication as
part of their benefits, they've also seen higher employee satisfaction as a result,"
he said.