Can employers and payers afford to cover GLP-1 drugs?

New, brand name medications and increased demand for them has long been a major contributor to rising health care costs. The problem has only become more complex with the skyrocketing use of glucagon-like peptide 1 class (GLP-1) drugs, such as Ozempic and Wegovy. While most prescription drugs have little to no brand recognition, these and other GLP-1s have become household names seemingly overnight, and their brand names have become synonymous with weight loss.

GLP-1s were initially developed to help people with type 2 diabetes control their blood sugar, but the weight loss side effects have made them a hot commodity. Demand has been driven by social media influencers and celebrities, leading many people to use the drugs off-label, meaning for a condition other than that for which it has been officially approved. Off-label use has created shortages for people with diabetes who need them most.

Recently, the FDA has approved select GLP-1 therapies specifically for weight loss, including:

• Wegovy
• Saxenda
• Zepbound, a GIP/GLP-1 dual-acting therapy

Of course, successful weight loss treatment is incredible news for the 42 percent of Americans who have obesity. The condition can lead to heart disease, stroke, type 2 diabetes and certain types of cancer, according to the Centers for Disease Control and Prevention.¹ Behind the scenes, though, GLP-1s are raising difficult questions about who has access to the drugs, the long-term health effects and how much the growing demand will drive up health spending.

How much do they cost?

GLP-1 drugs are expensive², retailing for as much as $16,000 per year. Blue Cross and Blue Shield of Kansas estimates that the cost to employers for adding GLP-1 weight loss coverage to their plan would result in an approximate 30 percent increase in drug coverage premiums.

Insurance carriers are working to determine how to provide coverage for the drugs. Not everyone who uses a GLP-1 will benefit from or be successful with the therapy, so covering GLP-1s across the board is too costly and would mean higher premiums for everyone. Payers are left to find a balance between coverage and affordability.

Blue Cross and Blue Shield of Kansas pharmacy and medical staff work closely with our pharmacy benefit manager, Prime Therapeutics, to study the latest data and research about these therapies. Prime Therapeutics data shows that only 22 percent of the 30 million lives in its current book of business have a benefit design that covers GLP-1s for weight loss.

The question of long-term use

To make the matter more complex, initial studies seem to suggest people who lose weight with GLP-1s will need to continue taking the drugs in order to keep the weight off. This long-term use would put an enormous strain on the cost of health care for individuals, insurance companies and employer groups.

“On one hand, there are those who are severely affected by diabetes, obesity and other health complications. These medications really can help improve these conditions. As a health insurer, though, it can get extremely expensive to cover these medicines for every patient. From what we know now, it would significantly raise the cost of coverage for our employer groups and our members,” says Matt Burns, chief actuary at Blue Cross and Blue Shield of Kansas.

What are health insurers covering?

Like most health insurers, Blue Cross covers medications when medically necessary for patients with type 2 diabetes, including GLP-1s, but does not cover requests for off-label use. For weight management coverage, Blue Cross has added coverage in 2024 for office visits and consultations, labs, and the cost of radiology and complications from bariatric surgery to support members with lifestyle modifications that are key to a weight loss journey.

Blue Cross also provides a weight management program available to all members. Registered nurses provide one-on-one support by phone at no additional cost to participants.

“We know these medications are expensive. We continue to work with our pharmacy benefit manager to analyze data and explore how we can offer coverage to those that need it while also managing costs,” says Tiffany Liesmann, chief pharmacist at Blue Cross and Blue Shield of Kansas.

For GLP-1 drugs for diabetes, Blue Cross utilization management procedures ensure that members who have type 2 diabetes are the only members who use these products. This includes prior authorization and quantity limits put in place to ensure that members are using the right medications for their condition, as well as the right amount of medication. These efforts prevent incorrect, excessive or unnecessary use of medications. This in turn helps promote member safety and contain costs.

Prime Therapeutics research

Two years, ago, Prime began an analysis to determine the return on investment from a total cost of care perspective when it comes to GLP-1s for weight loss.

The initial analysis revealed there is considerable uncertainty about the payback from the weight loss from GLP-1s. The data revealed that only 1 in 4 patients who started taking a GLP-1 for weight loss was taking the drug a year later. Research reported in JAMA in December 2023 also emphasized that patients may need to stay on the medications long term in order to keep the weight off.

• According to David Lassen, PharmD and Chief Clinical Officer at Prime, “In the first year, it’s pretty conclusive that we’re not seeing any return from a total cost of care perspective. It gives us pause to say – for an average employer group out there – ‘if you’re investing in this medication for your employees, don’t expect to see a return in year one.’”
• According to Joseph Leach, M.D., Senior Vice President and Chief Medical Officer at Prime, “We will need results of ongoing, multi-year studies to see if this treatment has downstream impacts on other health conditions, including cardiovascular events and diabetes development prevention, which are key benefits to weight loss management. Long-term impact on total cost of care also remains to be seen.”

Employer groups are wondering if employees who are taking the drug for diabetes will be on them indefinitely, creating a costly, new, long-term budget concern with lingering questions about any savings from reductions in obesity-related illness.

In a February 2024 article for Managed Health Care Executive³, Lassen states, “Our chief concern with these drugs right now is how do we best manage the waste, because there’s a real potential if people in real-world practice are not staying on these medications, then they are not going to do anything but promote cost and temporary weight loss,” he says. “If we just simply cover the medication and say, ‘Have at it,’ what is the likelihood of having success with that? Slim to none.”

According to Lassen, Prime Therapeutics are working on solutions to address these specific challenges. “The right approach is if you’re going to cover the benefits, then let’s make it as successful as possible and let’s also help mitigate the friction and confusion that is out there.” 

What are GLP-1s and how do they work?

In the GLP-1 space, there are specific products FDA-approved for diabetes and specific products approved for weight loss.

GLP-1 medications treat diabetes by mimicking a gut hormone called GLP-1 to signal to the body to release glucose-dependent insulin from the pancreas, which lowers your blood sugar. Additionally, these products slow the speed of stomach emptying, extending the feeling of a full stomach and curbing the appetite, amongst other effects in the body. Because of the slowed gastric emptying, many patients have gastrointestinal side effects that can often limit a patient’s ability to take these drugs—especially at the high doses recommended for weight loss. While many might think of these therapies as an easy fix, in reality, these drugs are not a cure and must be used in conjunction with a healthy diet and exercise.