A class of drugs that skyrocketed in popularity due to promising reports of weight loss is posing challenges for employers, who are grappling with if, and how, to cover them in their health plans.
The drugs, known as glucagon-like peptide 1, or GLP-1s, are commonly prescribed to treat type 2 diabetes, but have proven effective at boosting weight loss in non-diabetic people, too. The weight loss effects have piqued the interest of many consumers in the US, where an estimated 42% of adults are obese.
A recent survey of adults with obesity found that 44% of respondents would switch jobs to gain coverage for obesity treatment. In addition to attracting talent, funding obesity treatment has the potential to help employers save costs in the long run, given obesity has been linked to a number of other conditions. The catch for benefits leaders, though, is these drugs are expensive—so much so that a few large employers, including the healthcare company Ascension, recently dropped Wegovy, a GLP-1 approved for weight loss, from their health plans.
Here’s what HR leaders should know about the promises and costs of GLP-1s.
Efficacy of GLP-1s. GLP-1s for diabetes have been around since 2005. The first GLP-1 approved for weight loss was Saxenda, in 2014. The drug, manufactured by Novo Nordisk, requires patients to take an injection each day.
Since then, other GLP-1 weight loss drugs have come onto the market that require less frequent injections—just one a week—and have shown better results, according to Cody Midlam, director and pharmacist consultant at professional services firm WTW.
A 68-week study of more than 300 adults found those taking Wegovy lost 16% of their initial body weight, on average, compared to 6% for those who took Saxenda.
“It’s really a game-changer in terms of obesity medicine,” Shauna Levy, assistant professor at Tulane University Medical Center, said during an August 4 KFF webinar on the subject. Prior to medicine like Wegovy being available, previous iterations of the weight loss drugs weren’t as effective at helping patients lower their body weight, she said, and had more negative side effects.
Costs for insurers, employers. Despite the promising weight loss results of GLP-1s being marketed, the drugs are estimated to cost upwards of $10,000 a year per patient, posing financial challenges for health plans and HR pros managing benefits.
“The impact of financials is quite large, and that’s because of the price tag that the drugs have themselves,” said Midlam. WTW estimates that if one-half of a company’s employees were eligible to take Wegovy, it could increase the firm’s spending on drugs alone by 50%.
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Some employer health plans are now pulling back on coverage for GLP-1s due to concerns about costs and shortages. Sarah Jones Simmer, CEO of Found, a weight care management program, said close to 70% of the company’s patients do not currently have coverage for the class of drugs, a decline in coverage from the 35% who weren’t covered for them in December.
The University of Texas System recently announced they would stop covering more expensive GLP-1 weight loss drugs such as Wegovy for their workers. The employer told employees that monthly costs for the prescriptions rose from $1.5 million a year and a half ago to $5 million this May, Insider reported.
“Having employers exploring changing coverage is a really good indicator of just how impactful these drug costs are on their budgets,” Midlam said.
Recommendations for benefits leaders. Employers are in a tough spot when deciding whether to cover GLP-1s, given they have the potential to help companies cut down on their healthcare spending in the long run.
“Weight loss is a cornerstone to the management of many chronic conditions, like diabetes, hypertension,” Midlam said. “The idea is that if we can lower weight to a healthy goal with these drugs, then it should result in downstream cost savings overall.” He added, though, that there’s no indication covering the drugs would result in immediate cost-savings and any benefits would likely be long term.
Benefits leaders will need to find solutions that help manage costs while also providing access to critical care, Jones Simmer told HR Brew. When working with employers, Jones Simmer said they recommend GLP-1s where appropriate, but also a “wider toolkit of medications” beyond this class of drugs, in addition to lifestyle and behavior changes.
Employers who are looking into covering GLP-1s should reevaluate their pharmacy and medical benefits to ensure they’re offering access to benefits such as lifestyle and weight-loss programs, or a low-cost fitness benefit, said Eileen Pincay, vice president and national pharmacy practice leader at HR and benefits consulting firm Segal. Ideally, patients taking GLP-1s should also be on a behavioral management program that seeks to help improve their nutrition and exercise habits, she added.
“It’s going to be a combination of things, and it can’t just be the drugs,” Pincay said.