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Most employer health plans don’t cover new blockbuster weight loss drugs, but
that’s going to change
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Most employer health plans don’t cover new blockbuster weight loss drugs, but
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The Bottom Line


MOST EMPLOYER HEALTH PLANS DON’T COVER NEW BLOCKBUSTER WEIGHT LOSS DRUGS, BUT
THAT’S GOING TO CHANGE

Published Fri, Feb 16 202410:49 AM ESTUpdated Fri, Feb 16 202411:06 AM EST
Cheryl Winokur Munk@CherylMunk
WATCH LIVE
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Key Points
 * Consumers are clamoring for weight loss drugs like Novo Nordisk’s Wegovy and
   Eli Lilly’s Zepbound despite a monthly cost as high as $1,000 to $1,500, and
   using every discount they can source to lower the price.
 * While a majority of corporate health insurance plans offer GLP-1 drug
   coverage for diabetes, only about one-quarter extend that to weight loss,
   according to a recent survey.
 * But employer interest is rising, and employee benefits experts say it’s a
   matter of when, not if, more company insurance plans will cover the in-demand
   obesity treatments.

An injection pen of Zepbound, Eli Lilly’s weight loss drug, is displayed in New
York City, U.S., December 11, 2023. 
Brendan Mcdermid | Reuters

Many U.S. companies are grappling with health insurance coverage issues for
workers when it comes to GLP-1 drugs for weight loss.

Despite the hefty price tag — typically between $1,000 to $1,500 a month —
consumers are clamoring for drugs like Novo Nordisk’s Wegovy and Eli Lilly’s
Zepbound. This class of drugs, historically used to treat diabetes, has gained
broader appeal, and while some employers are providing coverage, often with
limitations, others are struggling to determine how to cover them without
breaking the bank.



An October survey of 205 companies by the International Foundation of Employee
Benefit Plans found 76% of respondents provided GLP-1 drug coverage for
diabetes, versus only 27% that provided coverage for weight loss. But 13% of
plan sponsors indicated they were considering coverage for weight loss.

“Right now, there’s still a lot of questions among employers,” said Julie Stich,
vice president of content at the International Foundation of Employee Benefit
Plans. In addition to high costs, companies don’t have long-term data on
effectiveness and potential side effects to support coverage, and some are just
biding their time until more of this information exists.

Still, many benefits experts say it’s a matter of when, not if, more employers
will cover GLP-1 drugs.

Certainly, prescription volumes of GLP-1 weight loss drugs are soaring. Novo
Nordisk recently became Europe’s largest publicly traded company due to investor
enthusiasm about the obesity market, and it just made a major acquisition in a
bid to increase manufacturing capacity of GLP-1 treatments due to demand, buying
drug manufacturer Catalent for $16.5 billion to increase the supply of Wegovy
and diabetes shot Ozempic.

Meanwhile, Eli Lilly’s recent results were buoyed by the launch of Zepbound,
which won approval from U.S. regulators in early November and raked in $175.8
million in sales for the fourth quarter. Wall Street’s most optimistic
assessment sees a drug that can post more than a billion dollars in sales in its
first year on the market and eventually become the biggest drug of all time. 



Here’s what employers and employees need to know about the changing landscape
for weight-loss drugs and health insurance coverage.


ANNUAL COST IS THE ELEPHANT IN ROOM AT $18,000 PER EMPLOYEE

At least 70% of the top 18 commercial health plans Tufts Medical Center tracks
in its specialty drug database cover GLP-1 drugs for obesity, with varying
limitations. But the largest companies in the U.S. are generally self-insured,
so they’re the ones calling the shots when it comes to coverage — and for them,
cost is a major issue.

States can decide whether to cover weight-loss drugs under Medicaid, which means
coverage can vary, according to a report from KFF. The state of North Carolina
recently made the decision to stop coverage of obesity drugs for state
employees.

Medicare doesn’t cover weight-loss medications, with the exception of patients
with Type 2 diabetes. Notably, 76% of older adults think Medicare should cover
prescription medication for weight management, according to recent findings from
the National Poll on Healthy Aging. 

At $1,500 a month, employers could be paying $18,000 a year for just one
employee’s supply of weight-loss drugs, said Greg Stancil, a senior account
executive at Scott Benefit Services. If you’ve got, say, 56 employees on the
drug, that’s over $1 million a year. That’s a cost that “just didn’t exist in
2022, now they have this potential long-term expense they’re trying to figure
out what to do with,” Stancil said.

“The balancing act is maintaining a robust benefits package so they can recruit
and retain employees, but also managing the cost of that package to keep costs
down for employees and the employer,” Stancil said. “Every employer would love
to cover everything to make everybody happy, but somebody’s got to pay for it.”


EMPLOYERS ALREADY COVERING WEIGHT-LOSS DRUGS SAY IT’S WORTH IT

Ninety-nine percent of companies already covering GLP-1s say they plan to
continue covering them, according to a survey by Accolade, a personalized
health-care company. Among other things, these employers cite higher employee
satisfaction and wellbeing, increased engagement in other wellbeing programs and
improvement in other health conditions as reasons for covering.

“HR benefit leaders recognize this is something employees want because a lot of
people do want to lose weight,” said James Wantuck, associate chief medical
officer at Accolade.


BMI, OBESITY AND QUESTIONS IN PLAN DESIGN

There are obvious benefits to losing weight and associated health benefits, but
there are other health-care and cost concerns employers have to factor in.

What might the utilization be within the company? Who should be covered? Should
there be limitations such as someone who has an obesity diagnosis, or BMI over a
certain limit?

A majority of companies (79%) that cover these drugs do require insured members
to jump over some hurdles before coverage is approved, according to the survey
by the International Foundation of Employee Benefits Plans. This includes
requiring prior authorization; using step therapy (32%), which requires the use
of other lower cost medications first; and specific eligibility requirements
(16%). The survey also found that companies allowed to select multiple
cost-controls, if applicable, also use annual and lifetime maximums. Fourteen
percent of respondents who cover these drugs said they had no cost-control
mechanisms in place.

Potential long-term costs to employers is an issue, and an especially hard
calculation since no one really knows how long people will need to stay on the
drugs for long-term effectiveness, while going off the drugs is associated with
gaining weight back.

Employers are “really struggling to determine the cost versus benefit,” Stich
said. 

Even though GLP-1 drugs are high-priced, they currently represent 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

Consumers whose companies don’t cover the drugs are in a tough position. Many
will be forced to pay out of pocket, or lose out, said Brian O’Connell, an
analyst who covers the insurance marketplace for InsuranceQuotes.com. “It really
depends on your bank account. If you’re making $45,000 a year, have a mortgage
and a child in college, there are limited options,” O’Connell said.

First, employees should find out from their employer what the benefits actually
are, Wantuck said. In some cases, these drugs may be covered, but restrictions
or requirements may apply, such as a BMI threshold to qualify, or the employee
may have to participate in an exercise or dietary program.

Consumers with commercial insurance may be able to get assistance through the
manufacturer if they are eligible for savings programs. The websites for Wegovy
and Zepbound do lay out terms for discount manufacturer programs that may apply.
For example, with Wegovy you must have a prescription and can’t be enrolled in a
plan where the drug is covered. Consumers should read the restrictions
carefully.  

Novo Nordisk says approximately 50 million adult Americans have coverage for
anti-obesity medicines — 40 million through commercial insurance and 10 million
through Medicaid — and approximately 80% of U.S. Wegovy patients with commercial
coverage pay $25/month or less. For commercially insured patients who do not
have insurance coverage, or pay cash for their prescriptions (but are not
government beneficiaries), Novo Nordisk and Eli Lilly cite potentially
significant savings off the full retail price: as much as $500, according to
Novo Nordisk, and up to 50%, according to Eli Lilly, though monthly and annual
caps on discounts apply.

“For consumers, it never hurts to look for manufacturer coupons or discounts and
apply for them,” wrote Krutika Amin, associate director at health care policy,
research and news organization KFF, in an email. “The answer may be no in
certain cases but in other situations patients could stand to save several
hundred dollars.”

Amin added that as more manufacturers enter the GLP-1 market, manufacturers may
be offering competing discounts to try to get patients to pick their drug. “The
market is still new but as demand stabilizes and there is more competition in
the GLP-1 market, manufacturers may change prices to stay competitive. So even
if the answer was no last time, it might be worth keeping an eye out,” she
wrote.

Looking overseas, which some U.S. consumers do when it comes to high-priced
drugs, is less likely to help out in this case, at least right now. While recent
KFF research indicates that even with coupons and discounts, prices in the U.S.
are higher than in other large, wealthy countries, Amin said that as countries
have faced shortages for people using these drugs for diabetes it may not be
possible to get these drugs abroad.

Meanwhile, benefits consultants expect the coverage problem will eventually
resolve itself, given the need and long-term benefits these drugs may be able to
provide.

“It’s a matter of time before most companies will be covering these drugs in
some fashion,” Wantuck said. “There’s a lot of evidence that they help people
lose weight and prevent really serious illnesses like stroke and heart attack.
It’s going to be harder and harder not to cover these drugs because the benefits
seem to be so great.”

watch now
VIDEO2:4802:48
North Carolina cuts obesity drug coverage for state employees
Last Call


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