To Cover or Not to Cover: Weight Loss Medications
There is a topic we’re hearing time and time again: how are employers responding to the demand for new weight loss medications, and are they being covered on insurance?
Market Growth and HR Challenges
The market and availability of these GLP-1 weight loss medications (such as Wegovy, Ozempic, and Mounjaro) has exploded in the past year, leaving HR leaders wondering how manage employee demand. Some businesses have seen employees leaving for companies that offer coverage on these medications, and insurance companies have been inundated with requests for coverage.
Current Insurance Coverage
Today, only 27% of plans offer coverage of GLP-1 medications for weight loss, though most plans cover these same drugs for other conditions like type 2 diabetes. As HR leaders, we’re all asking ourselves whether to include these drugs in our plans and weighing the various pros and cons.
Cost Concerns
One significant obstacle is cost; GLP-1 medications are prohibitively expensive, both for individuals and for businesses. At an average cost of $1,000 per month, a business could spend $12,000 per employee annually. With 84 employees using GLP-1 medications, that cost could balloon to over $1,000,000 per year. In a country where nearly 50% of the population qualifies for obesity medications, the financial burden could quickly become unbearable for most businesses.
FDA Approval and Liability
There are also concerns about FDA approval and limited long-term research. Currently, only three GLP-1 drugs are FDA approved for weight loss: Wegovy, Zepbound, and Saxenda. Other drugs, such as Mounjaro and Ozempic, are FDA approved for type 2 diabetes but not for weight loss. Many employers and insurance companies have concerns about the potential liability of covering drugs for off-label use, especially given the limited long-term research on these newer medications. This concern is partly influenced by the fen-phen fallout in the 1990s – a situation that no insurance company or employer wants to repeat.
Demand for Coverage
On the other hand, we are starting to see a high demand for insurers and businesses to offer coverage for GLP-1 drugs. Some employees are seeking jobs at companies that offer this coverage. Of the companies that are covering GLP-1 drugs, 99% say they plan to continue offering coverage. These businesses report stronger employee engagement, decreased turnover, and increased participation in wellness programs. By addressing obesity, they also hope to reduce medical costs associated with obesity-related conditions.
Evolving Market Landscape
Also, this is a new and rapidly changing market. The landscape for GLP-1 weight loss medications will continue to evolve as more manufacturers enter the market. The increased competition could potentially drive costs down, making these medications more accessible for both individuals and businesses.
Preparing Your Approach
Understanding the cost versus benefit of covering weight-loss drugs is nuanced and varies by business – however, now is the time to prepare your approach. With the market quickly evolving, proactive planning will enable your business to adapt and make informed decisions. We recommend engaging with your insurance providers, assessing employee demand, and weighing the pros and cons to determine the right solution for your unique business.
We want to hear from you: Are you currently covering GLP-1 drugs for weight loss? What factors influenced your decision? If you are not covering them, do you anticipate any changes in your coverage policy in the future?
