New blockbuster weight loss drugs will soon be covered by most employer health plans.

• Despite the high monthly cost of weight loss drugs like Wegovy and Zepbound, consumers are still demanding them and are using every available discount to lower the price.
• A recent survey found that while most corporate health insurance plans cover GLP-1 drugs for diabetes, only a quarter extend that coverage to weight loss.
• As employer interest grows, experts predict that it's only a matter of time before more company insurance plans cover obesity treatments.

Numerous American businesses are facing challenges in providing health insurance coverage for employees regarding GLP-1 medications for weight loss.

Although these drugs, such as Wegovy and Zepbound, are typically priced between $1,000 to $1,500 a month, consumers are still demanding them. This class of drugs, originally used to treat diabetes, has gained popularity and while some employers are covering them, others are struggling to determine how to do so without exceeding their budget.

According to an October survey of 205 companies by the International Foundation of Employee Benefit Plans, 76% of respondents offered GLP-1 drug coverage for diabetes, while only 27% offered coverage for weight loss. However, 13% of plan sponsors stated they were considering adding weight loss coverage.

Currently, employers are still grappling with numerous questions regarding the effectiveness and potential side effects of high-cost coverage, as they lack long-term data to support their decisions. Some companies are simply waiting for more information before making a final decision.

Experts predict that it is only a matter of time before more employers cover GLP-1 drugs.

The demand for GLP-1 weight loss drugs is increasing, and Novo Nordisk has recently become Europe's largest publicly traded company due to investor enthusiasm about the obesity market. In response to this demand, Novo Nordisk has acquired Catalent for $16.5 billion to increase the manufacturing capacity of GLP-1 treatments, including Wegovy and Ozempic.

Eli Lilly's recent results were boosted by the successful launch of Zepbound, which was approved by U.S. regulators in November and generated $175.8 million in sales during the fourth quarter. Wall Street's most optimistic forecast predicts that the drug will generate more than $1 billion in sales in its first year and eventually become the biggest drug of all time.

Employers and employees should be aware of the evolving landscape regarding weight-loss drugs and health insurance coverage.

Annual cost is the elephant in room at $18,000 per employee

GLP-1 drugs for obesity are typically covered by at least 70% of the top 18 commercial health plans tracked by Tufts Medical Center, but self-insured companies in the U.S. have the final say on coverage, and cost is a significant concern for them.

According to a report from KFF, states have the option to decide whether to cover weight-loss drugs under Medicaid, resulting in varying coverage. North Carolina recently stopped covering obesity drugs for state employees.

Medicare does not typically cover weight-loss medications, except for individuals with Type 2 diabetes. However, a recent survey found that 76% of older adults believe Medicare should provide prescription medication for weight management.

Employers could be paying $18,000 a year for one employee's supply of weight-loss drugs at $1,500 a month. If there are 56 employees on the drug, this amounts to over $1 million a year. This expense did not exist in 2022, and now employers are trying to determine how to manage it long-term, said Greg Stancil, a senior account executive at Scott Benefit Services.

Stancil stated that the balancing act for employers is to provide a comprehensive benefits package to attract and retain employees while managing the cost of that package to keep expenses low for both employees and employers. However, it's not feasible for every employer to cover everything to make everyone happy, as someone must pay for it.

Employers already covering weight-loss drugs say it’s worth it

According to a survey by Accolade, 99% of companies currently covering GLP-1s plan to continue doing so. Employers cited reasons such as higher employee satisfaction and wellbeing, increased engagement in other wellbeing programs, and improved health conditions for their decision to cover.

James Wantuck, associate chief medical officer at Accolade, stated that HR benefit leaders acknowledge the desire of many employees to lose weight.

BMI, obesity and questions in plan design

While losing weight can bring numerous health benefits, employers must also consider other health-care and financial implications.

What are the potential uses of the company's resources? Who should be included? Should there be any restrictions, such as those with an obesity diagnosis or a BMI above a certain threshold?

According to a survey by the International Foundation of Employee Benefits Plans, 79% of companies that cover these drugs require insured members to meet certain criteria before coverage is approved. This includes prior authorization, step therapy (32%), which involves using lower cost medications first, and specific eligibility requirements (16%). Additionally, companies that are allowed to choose multiple cost-controls, if applicable, also use annual and lifetime maximums. Fourteen percent of respondents said they had no cost-control mechanisms in place.

The long-term costs to employers of employees staying on drugs for long-term effectiveness is a difficult calculation, as no one knows how long people will need to remain on the medication, and going off the drugs can result in weight gain.

According to Stich, employers are facing challenges in determining the cost-benefit analysis.

Although GLP-1 drugs are expensive, they account for only 6.9% of annual claims, according to data from the International Foundation of Employee Benefit Plans.

How consumers can try to save in the meantime

Individuals whose employers do not provide coverage for certain medications face a difficult situation. They may have to pay for the drugs out of pocket or forgo treatment, according to Brian O'Connell, an insurance marketplace analyst at InsuranceQuotes.com. "It all comes down to your financial resources," O'Connell stated. "If you earn $45,000 per year, have a mortgage and a college-aged child, your options are limited."

Employees should check with their employers about the benefits of these drugs, as some may have restrictions or requirements, such as a BMI threshold or participation in an exercise or dietary program.

Eligible consumers with commercial insurance may receive assistance from manufacturers through savings programs, as outlined on the websites for Wegovy and Zepbound. However, consumers should carefully review the restrictions, such as the requirement for a prescription and exclusion of coverage for Wegovy.

Approximately 50 million adult Americans have coverage for anti-obesity medicines, with 40 million through commercial insurance and 10 million through Medicaid. About 80% of U.S. Wegovy patients with commercial coverage pay $25/month or less. For commercially insured patients without coverage or who pay cash for their prescriptions (but are not government beneficiaries), Novo Nordisk and Eli Lilly offer potentially significant savings off the full retail price, with Novo Nordisk citing up to $500 and Eli Lilly up to 50%, though monthly and annual caps on discounts apply.

It's always beneficial for consumers to search for manufacturer coupons and discounts and utilize them, as they may save a significant amount of money in some cases.

As the GLP-1 market becomes more competitive, manufacturers may offer discounts to attract patients. However, the market is still new and prices may change to remain competitive. Therefore, it is important to keep an eye out for any changes in the market.

Overseas shopping for high-priced drugs may not be beneficial for U.S. consumers in this situation, as prices in the U.S. are higher than in other wealthy countries, and there may be difficulties in obtaining these drugs abroad due to shortages.

Benefits consultants anticipate that the coverage issue for these drugs will eventually be resolved due to the potential long-term benefits they may offer.

Most companies will eventually cover these drugs, as there is substantial evidence that they aid in weight loss and prevent serious illnesses such as stroke and heart attack, making it increasingly difficult not to provide coverage.