A growing concern affecting employer-sponsored health plans worldwide is rising obesity rates and their associated costs. Obesity has become a significant burden on healthcare budgets, affecting employers year after year. Given that a quarter of employers acknowledge obesity as the primary driver of overall healthcare costs, it’s crucial to explore the inclusion of in-demand GLP-1 medications like Ozempic in health insurance offerings.
GLP-1 medications are a class of drugs that were originally used to treat type 2 diabetes mellitus (T2DM) but are now popular for weight loss. They work by slowing down the movement of food in the digestive tract and reducing the brain's hunger stimulus.
In recent years, three major GLP-1 medications—Ozempic, Wegovy, and Mounjaro—have gained popularity due to their effectiveness. The U.S. Food and Drug Administration (FDA) has also recently approved Zepbound by Eli Lilly for weight loss.
As of 2023, prescription rates have significantly increased. Both individuals with and without a documented medical history of type 2 diabetes or obesity are now receiving approvals and prescriptions for these medications.
Data collected by the research company Truveta from January 2020 to April 2023 showed that over 120,000 patients were prescribed these medications for the first time. Half of the participants in this study had medical records documenting either type 2 diabetes, a history of a body mass index (BMI) exceeding 27, or obesity. Patients with these medical records were classified as “on-label,” and those without were “off-label.” The results showed that 56% of those who received treatment for type 2 diabetes were off-label. In contrast, 81% of those who received treatment for weight loss were on-label.
As medical advancements continue to change healthcare, employers, insurers, and healthcare providers are at a critical point, evaluating the intricate balance between rewards and risks associated with including GLP-1 treatments in health plans. Stakeholders must consider several factors, including effectiveness, safety, cost, and the overall impact on population health.
As metabolic disorders become more common worldwide, studies from the Centers for Disease Control and Prevention (CDC) show that healthcare costs for individuals with obesity are nearly $2,000 higher than those with a healthy body weight. Including weight-loss treatment in employee benefits packages would likely be well-received. A recent study found that 77% of human resource (HR) decision-makers believe that GLP-1 coverage would make employees feel they have a better health insurance package.
Encouragingly, the American Medical Association (AMA) has called for insurers to fully cover medications for the treatment of obesity. On November 14, 2023, the AMA passed a resolution supporting "Health insurance coverage parity for evidence-based treatment of obesity, including FDA-approved medications without exclusions or additional carve-outs." This declaration offers hope that private insurers and the federal government will collaborate to reduce the cost of GLP-1 as an obesity treatment, acknowledging the serious health risks associated with untreated obesity.
However, employers are questioning whether they should restrict the usage or cost-sharing of these drugs. Initially, many employers excluded coverage for obesity treatment due to concerns about the high costs of this drug class and off-label prescriptions.
Currently, some Pharmacy Benefit Manager (PBM) plans cover Ozempic as an approved treatment for type 2 diabetes, while Wegovy and similar drugs are specifically prescribed for weight loss. Depending on the medical formulary, the standard offering could exclude all weight-loss medications.
GLP-1s typically cost between $900 and $1,300 per month to fill. In 2023, GLP-1 drugs made up 6.9% of employers' annual claims, according to the International Foundation of Employee Benefit Plans (IFEBP). A study by the American Diabetes Association shows that people diagnosed with diabetes represent 25% of healthcare spending in the United States, and medical costs for those living with diabetes have increased by 35% over the past 10 years.
As the market shifts, we are seeing insurers create solutions for excluded weight-loss drugs. Carrier underwriting indicates that employers can include medications with a “weight-loss drug” rider. However, the typical cost of this rider adds 3% to 5% to medical premium rates. Cost control strategies will be essential for employer coverage, as we have seen in other benefits in the past, such as fertility treatment.
Another important consideration is patient adherence and utilization. If a patient stops taking GLP-1 medications within a year, they may regain some or all of the weight they lost. GLP-1 drugs are not intended to be a quick fix; they work best when combined with a healthy diet, regular exercise, and lifestyle modifications. Therefore, integrating care and building strong relationships with physicians are essential parts of the population health strategy for employer-sponsored health plans.
Given these factors, we encourage employers to consider modifying their health plans to include changes to GLP-1 coverage. However, it’s important to understand how these changes may affect your PBM contract and ongoing costs before adjusting eligibility or step therapy.
To help you understand the initial, ongoing, and potential costs to your business and pharmacy risk management strategy, we at Marsh McLennan Agency are here to provide valuable insights and guidance tailored to your needs. For a consultation, reach out directly to Tyler Zalucki and Kendra Griffith at tyler.zalucki@marshmma.com and Kendra.griffith@marshmma.com.
Health & Welfare Consultant
Employee Health & Benefits Client Executive
