The popularity of GLP-1 drugs is driving up companies’ health-care costs, especially for those that provide coverage for employees using the medications for weight management.
In a recent Business Group on Health survey of 105 employer members, most of which are large corporations, just under 77% said they’re feeling an incremental cost impact from the drugs. That broke down as 42% that are feeling such impact “to a great extent,” and 35% “to a moderate extent.”
Business Group otherwise did not quantify precisely how much extra cost companies are bearing, on average. However, according to the Employee Benefit Research Institute, broad GLP-1 coverage that includes weight management can increase overall employer health-care premiums by 5.3% to 13.8%.
Most companies cover the drugs’ use for managing Type 2 diabetes, and among respondents to the survey, 67% cover them for weight management. Among the latter, only 72% said they were likely to continue that coverage in 2027, while 10% specified that they likely would not. Those that don’t currently cover GLP-1 drugs for weight loss are unlikely to do so in the future, Business Group noted.
The main GLP-1 drugs that help with weight management, in addition to Type 2 diabetes, are Wegovy and Zepbound, manufactured by Novo Nordisk and Eli Lilly, respectively. Novo Nordisk’s Ozempic and Eli Lilly’s Mounjaro are not approved for weight management.
GLP-1 drugs are extremely popular. According to the Journal of the American Medical Association, about 12% of American adults report having used them. Among those, 40% use them exclusively for weight management.
“Our findings show the tremendous concern employers have regarding these medications from a cost and financial viability perspective,” said Business Group chief executive Ellen Kelsay. “Against the backdrop of anticipated double-digit healthcare cost increases, fueled to a large degree by GLP-1s and overall prescription drug costs, companies cannot ignore [this] reality.”
As noted by Business Group chief strategy officer Jim Winkler, one key concern is that employees may use the drug, lose the weight and later gain it back, or may otherwise use it inappropriately.
Addressing that concern, many companies employ strategies to ensure the appropriate use of GLP-1s for weight loss, such as validating clinical eligibility via objective biometric data and requiring participation in a weight management program to receive coverage. Some companies limit coverage to specific providers and exclude certain medications from their formulary.
The survey also found that more than half of employers that cover GLP-1s for weight management expect the expensive medications to yield significant clinical benefits. However, few have yet seen evidence, such as a reduction in obesity rates and fewer employees needing bariatric surgery.
Further, the survey found that employers expect the new availability of oral GLP-1 medications for weight loss, which are just now starting to appear on the market, will result in higher demand for the drugs.
When it comes to how much employees pay for the medications, most employers (83%) use the same standard cost-share arrangement as they do for other medications, Business Group wrote.
Nearly 80% of the surveyed employers involve their executive leadership in GLP-1 coverage decisions.
