GLP-1, or glucagon-like peptide-1 drugs, are a synthetic version of the body’s naturally occurring hormone that reduces appetite and slows down the rate at which food leaves the stomach. Originally developed to treat diabetes, GLP-1s’ popularity has skyrocketed because of their use for weight loss. In 2023, GLP-1s alone accounted for nearly 7% of the total amount spent on prescriptions drugs in the U.S.[1] [2]

GLP-1s have proven to be very effective in the fight against diabetes and obesity, but they do have side effects. Gastrointestinal symptoms, such as nausea, vomiting, diarrhea, and constipation, are the most common side effects. Other less common, but more serious, side effects include: pancreatitis, bowel obstruction, and gallstones. A recent study by Blue Cross Blue Shield found that 58% of patients stopped taking GLP-1s within three months, before seeing any meaningful health benefits, possibly due to side effects.[3] 

Recently, a number of insurers and employer-sponsored health plans have announced they will no longer cover weight loss drugs. Blue Cross Blue Shield of Michigan will no longer cover GLP-1s to treat obesity starting January 2025. Two large employers, Ascension in St. Louis and the University of Texas System in Austin, have dropped coverage from their employee health plans. The Mayo Clinic has added a lifetime limit of $20,000 for weight loss drugs for its employees.[4]

It’s hard to predict the demand for GLP-1s, given the side effects and high cost. The potential market for the drugs continues to grow, with an estimated 50% of Americans predicted to be obese by 2030.[5] The good news is that self-funding your employee health plan can be a smart decision for companies facing rising health care costs. Self-funding allows you to have more control and flexibility over plan design, enabling companies to tailor coverage and explore cost-containment strategies more effectively.

FDA-Approved GLP-1 Drugs

Source: GoodRx[8] [9]

Expected Annual Health Plan Costs for a 250-Life Employer Group

Source:[10] Berkley Accident and Health Internal Data

While it remains to be seen exactly how insurers will manage these rising costs, we estimate that an employer with 250 covered employees will spend between $60,000-$112,000 on GLP-1s alone in 2025. For larger groups, the impact will be even greater.

Here are some GLP-1 drug considerations for organizations with self-funded health plans:

1. There is no one-size-fits-all strategy.
   Only 25% of employers covered GLP-1s in 2023,[11] but a survey done in October 2023 found that 43% of employers said they planned to offer coverage in 2024.[12] It remains to be seen how many employers actually added coverage in 2024. Each employer will have to weigh the pros and cons of covering GLP-1s for diabetes, weight loss, or both.
   
   
2. Different drugs affect self-funded plans differently.
   The dramatic growth of GLP-1s is comparable to cell and gene therapies, which have been on a growth trajectory since 2017. However, the two treatments will affect self-funded employers differently. Cell and gene therapy treatments are relatively rare, but extremely high cost. GLP-1 usage is more common, but lower cost. Looking at Stop Loss insurance, cell and gene therapy claims are more likely to impact Specific coverage, while GLP-1s are more likely to impact first-dollar and Aggregate coverage.
   
   
3. Employers should do their homework.
   Companies can evaluate their demand for GLP-1s by looking at their group’s claims and PBM data. They should also review their PBM and formulary strategies to ensure that GLP-1s are obtained at the lowest price for the patient and the health plan. And finally, employers should discuss a multi-step strategy with their benefit consultants – if/when to cover GLP-1s, how to cover them, and what authorizations are needed.
   
   
4. Consider all aspects of employee well-being.
   Employers should consider wraparound support for employees who receive these medications, such as nutrition counseling, access to dieticians, exercise/fitness benefits, healthy food options in the workplace, and behavioral health support, so employees receive holistic care.

For additional employer resources for managing health care costs, our policyholders can contact Berkley Edge, our cost-containment service. 

To discuss self-funding strategies for your health plan, contact your Berkley representative.

[1] Healthleaders, U.S. $772.5B Pharmacy Spend in 2023 Driven By Weight-Loss Drugs, https://www.healthleadersmedia.com/pharma/us-7725b-pharmacy-spend-2023-driven-weight-loss-drugs

[2] Becker’s Hospital Review, GLP-1s: 8 things hospital leaders should know, https://www.beckershospitalreview.com/glp-1s/glp-1s-8-things-hospital-leaders-should-know.html

[3] BlueCross BlueShield, Most Americans Do Not Use Weight-Loss Drugs Long Enough to See Meaningful Weight-Loss, https://www.bcbs.com/press-releases/most-americans-stop-weight-loss-drugs-before-seeing-meaningful-benefit

[4] Becker’s Payer Issues, BCBS Michigan to drop weight loss drug coverage, https://www.beckerspayer.com/payer/bcbs-michigan-to-drop-weight-loss-drug-coverage.html

[5] Healthcaredive, GLP-1s for weight loss leave employer in a bind over coverage, https://www.healthcaredive.com/news/glp1-employer-coverage-weight-loss/696309/

[6] National Institute of Diabetes and Digestive and Kidney Diseases, Overweight & Obesity Statistics, https://www.niddk.nih.gov/health-information/health-statistics/overweight-obesity

[7] Verywell Health, Type 2 Diabetes: Statistics and Facts, https://www.verywellhealth.com/type-2-diabetes-statistics-5214216

[8] GoodRx, Ozempic, Trulicity, and More: 10 GLP-1 Agonist Drugs and How to Navigate Your Options, https://www.goodrx.com/classes/glp-1-agonists/glp-1-drugs-comparison

[9] GoodRx, GLP-1 Agonists, https://www.goodrx.com/classes/glp-1-agonists

[10] J.P. Morgan, The increase in appetite for obesity drugs, https://www.jpmorgan.com/insights/global-research/current-events/obesity-drugs

[11] Healthcaredive, GLP-1s for weight loss leave employer in a bind over coverage, https://www.healthcaredive.com/news/glp1-employer-coverage-weight-loss/696309/

[12] SHRM, Employers Covering GLP-1 Drugs in Health Plans Could Nearly Double in 2024, https://www.shrm.org/topics-tools/news/benefits-compensation/employers-covering-glp1-drugs-could-nearly-double-in-2024-accolade-weight-loss-ozempic-wegovy

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