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.