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Rise In Weight Loss Drugs Causing Headaches For Employers’ Health Care Plans Featured Image

Rise In Weight Loss Drugs Causing Headaches For Employers’ Health Care Plans

Ozempic and Wegovy may be good for people’s waistlines, but they are causing havoc for employers’ health care plans.

The meteoric rise of these GLP-1 drugs in the past few years has left employers struggling to find a way to manage escalating prescription drug costs. While originally used to treat Type-2 diabetes, GLP-1s have taken off as the latest weight loss craze.

And the numbers are staggering.

GLP-1 use for Type-2 diabetes has increased 115% in the last three years, but non-diabetic use has skyrocketed 570% in the same time period. Once amounting to $3 million per month in costs to insurance plans, GLP-1s accounted for $14 million per month in 2023 – and it’s only expected to get more expensive. Within the next five years, those costs are estimated to hit $50 million per month.

The rising costs associated with GLP-1 could put employers in a serious financial predicament.

It could mean an increase of $48.50 per member per month in health plan premiums for all members to cover those projected costs. These drugs are one reason why the average cost for health care benefits is set to increase by 8.5% to about $15,000 per employee in 2024, according to professional service firm Aon plc.

Demand Is High for GLP-1s – And It Will Only Grow Higher

What makes this a difficult situation for employers?

People really want GLP-1s.

In a survey of 1,300 Americans about desired job benefits, coverage for weight-loss drugs like Ozempic and Wegovy ranked higher than things like unlimited PTO, work-from-home/hybrid work and child care assistance.

In fact, 21% said they would be very likely or likely to switch jobs if a company offered coverage. That creates a dilemma for employers and HR professionals: drugs like GLP-1s can be great for talent recruitment and retention, but they can be massively expensive.

“Attracting and keeping talented employees in your business is almost a full-time job in and of itself,” said Dr. Danielle Kelvas, founder of medical consulting company DKMD, told Albany Business Review. “By offering a robust health coverage plan, it most certainly sweetens the deal, but there are many liabilities if an employer tries to offer specific medications by way of their insurance.”

Not Everything Is Golden About GLP-1s

While GLP-1s are great for addressing Type-2 diabetes, far more people are using it for weight loss and weight management because of its ability to suppress appetite. Because managing costly prescription drug prices will become an increasingly serious issue for employers, there are some important things to consider:

  • GLP-1s are increasingly popular but they may not be the right treatment for everyone. Some employees can find similar results with more cost-effective options.
  • GLP-1s are an effective treatment for adults with Type 2 diabetes, but should be taken on the recommendation of a physician. Keep in mind there are known side effects for these drugs, including kidney and gastrointestinal issues.
  • Especially for drugs with such intense demand like GLP-1s, finding employee benefits companies with direct relationships with pharmacies can be an important step toward managing costly prescription drug prices.

For better and worse, GLP-1s have proven to be a disruptive medical treatment. Since they are relatively new to the market, there are sure to be questions and uncertainty around the effectiveness and coverage of these drugs. While CDB clients’ plans currently do not cover weight loss medications, reach out to your Account Manager if you have any questions.

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