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GLP-1 drugs: Implications for employer health plans

By Chantell Sell Reagan, PharmD and Cody Midlam, PharmD | February 15, 2024

The increasing use of GLP-1 drugs for weight loss is impacting employer healthcare budgets.
Health and Benefits

The high cost of GLP-1 (glucagon-like peptide 1) drugs is straining employer healthcare budgets as they are increasingly used for treating obesity. With several more GLP-1 drugs expected to hit the market by 2026, costs for employer health plans are likely to continue to rise. Employers are considering various coverage and management strategies for GLP-1 drugs, such as prior authorization, limiting coverage to certain individuals and setting higher cost-sharing requirements. But the increasing use of these drugs raises several challenges and questions for employers.

GLP-1 drugs like Wegovy and Ozempic were developed to treat type 2 diabetes, but they’ve gained media attention in the past couple of years for their ability to help people lose weight. Both drugs have the same active ingredient, semaglutide, and neither is available as a generic.

  • Wegovy is the brand name for semaglutide, approved by the Food and Drug Administration (FDA) for weight loss.
  • And Ozempic is the brand name approved for type 2 diabetes.

They are called “GLP-1 agonists” because they mimic the GLP-1 hormone and are called “agonists” because they activate bodily processes.

Zepbound, approved in early November 2023, is the newest weight-loss drug. It contains tirzepatide, the same active ingredient as Mounjaro, which is the version approved for diabetes. Tirzepatide is a GLP-1 agonist plus another hormone and has been found to result in even more weight loss than Wegovy.

Clinicians are familiar with the safety and side-effects of GLP-1 drugs as they have been used for treating diabetes since GLP-1 drugs were first approved in 2005. Yet when a drug is used by more people for a different purpose than originally intended, the FDA tracks adverse events to identify safety concerns. Gastrointestinal issues like nausea and vomiting are the most common side effects and the reason some people stop taking the drugs. To minimize GI issues, the drugs are prescribed at a lower dose, then increased gradually until the higher dose can be tolerated. The FDA has received reports of suicidal ideation, hair loss, as well as reports of stomach paralysis, although these are rare.

GLP-1 drugs improve blood sugar control for type 2 diabetes. These drugs also curb appetite and slow the movement of food through the stomach and gastrointestinal (GI) tract, making people feel fuller longer. Because they feel full longer, they tend to eat less and lose weight.

Why GLP-1 drugs are so popular

Obesity is a common condition in the United States and a precursor for many other illnesses, such as heart disease, diabetes, and certain cancers. There are clinical and financial impacts from obesity that may be mitigated by preventive measures as well as medication.

The Center for Disease Control estimates:

  • 42% of the U.S. adult population is obese.
  • 38% have prediabetes.
  • 12% of the population has diabetes.

Researchers are studying GLP-1 drugs’ impact on other diseases that have obesity as a common risk factor. For example, semaglutide reduces the risk of a major cardiovascular event by 20% in those with obesity, and the FDA is likely to approve it for such use.

The manufacturer is also studying semaglutide for Alzheimer’s disease and non-alcoholic steatohepatitis (NASH or fatty liver disease). There is currently no approved treatment for NASH, a common condition that can cause liver failure.

Prevalence of related conditions and utilization increases

The high cost of this new class of weight-loss drugs is straining employer healthcare budgets. WTW has found that one in 56 members (1.7% of total) in employer-sponsored insurance benefits received a GLP-1 for obesity and costs more than doubled in 2022. Costs for GLP-1 drugs in 2023 were higher than the previous calendar year. The increased use of GLP-1 drugs, in combination with their price, places the drugs at the top of most employers' yearly pharmacy spending.

GLP-1 drugs are widely used for diabetes and are expected to continue to increase in use compared to older diabetes medications. GLP-1 drugs provide benefits beyond lowering A1C, a common measure of diabetes management. Given their efficacy in treating diabetes and weight loss, GLP-1 drugs are likely to continue dominating employers' top spending in the years ahead.

The 2022 WTW Rx Collaborative Annual Report found that, across all Collaborative employers, two of the top four drugs by spending were GLP-1’s used for diabetes. The graphic below shows that four GLP-1 drugs account for 9% of the overall prescription cost for the Rx Collaborative after rebates and discounts.

In 2022 and 2023, the use of GLP-1 drugs used for both diabetes and weight loss went up. This pattern is consistent for employers who do and those who don't offer weight-loss benefits. The trend is outpacing the increase in prevalence of diabetes. This is likely due to physicians prescribing diabetes drugs like Ozempic and Mounjaro for weight loss. This is called “off label” use, meaning how the patient uses it doesn't match the FDA label – the written guide that comes with a drug approval.

The increase in prescribing of drugs like Ozempic and Mounjaro for weight loss could be happening for a number of reasons:

  • There are drug shortages for certain doses of Wegovy, Ozempic and Mounjaro.
  • Ozempic can cost less than Wegovy.
  • Diabetes drugs like Ozempic and Mounjaro could be prescribed for members if their plans don’t cover weight-loss drugs like Wegovy. Plans usually cover the drugs for diabetes, so the claims are denied when used for that purpose.

When the drug shortages recede, new prescriptions will likely increase. Different dosage forms for all three of the more-potent GLP-1 drugs (Ozempic, Mounjaro and Wegovy) were in short supply in 2023, and the shortage is expected to continue in 2024.

These factors have spurred the development of an entire industry focused on GLP-1-driven weight loss. Non-FDA approved semaglutide is used in compounding pharmacies. The drugs are given readily in medical spas. Direct to consumer and direct to employer telemedicine providers can prescribe weight-loss drugs virtually. The FDA has sent warning letters to curb dispensing of illegally marketed semaglutide.

According to IQVIA data, Wegovy had an adherence rate of about 41%, with an average of five refills over a 12-month period. And, Ozempic had an adherence rate of 51% over 12 months (meaning just about half of members continued taking the drug). There are multiple factors likely contributing to this adherence number, including discontinuation due to:

  • Side effects
  • Ineffectiveness
  • Out-of-pocket costs
  • Availability due to shortages

We'll continue to track adherence to these products moving forward.

The promise of GLP-1 drugs amid equity issues

We know the GLP-1 drugs help patients lose weight, and we know reducing weight can reduce the toll from many chronic conditions, including diabetes, high blood pressure, back pain, and others. We also know that managing chronic conditions is costly. For example, the American Diabetes Association finds that people with diabetes have medical expenditures that are 2.6 times higher than those without diabetes. To see the full potential of GLP-1 drugs in improving clinical outcomes, they should be accessible to members who need them most.

However, GLP-1 use isn't highest in geographies with the highest rates of diabetes or obesity. The first map shows the growth of all GLP-1 drugs from Q3 2022 to Q3 2023. This is in comparison to the second heat map, the growth of the GLP-1 drugs for weight loss only (Saxenda and Wegovy). Long-term studies to assess medical cost reductions associated with these weight-loss medications are not yet available.

The growth of all GLP drugs from Q3 2022 to Q3 2023.
Growth of all GLP-1 drugs from Q3 2022 to Q3 2023. WTW Rx Collaborative data
The growth of the GLP-1 drugs for weight loss only (Saxenda and Wegovy).
Growth of GLP-1 drugs for weight loss only from Q3 2022 to Q3 2023. WTW Rx Collaborative data

Data from OptumRx indicates that females make up most of the users at 82%, with males making up only 18%. Additionally, individuals aged 35 to 54 account for half of the overall usage.

More weight-loss drugs are coming soon

With the exceptional sales growth of GLP-1 drugs in recent years, many manufacturers are working on competing drugs for weight loss. There are over 250 obesity drugs being studied currently, with a boom in the market expected by 2026.

The latest drug is Zepbound, which was approved in November 2023. It results in even more weight loss than Wegovy. The diabetes version of Zepbound, called Mounjaro, is already a top cost driver for many employers. Mounjaro is prescribed both on-label for diabetes and off-label for weight loss. Mounjaro is a GLP-1 plus one other component that is believed to result in more weight loss compared to semaglutide.

Another drug being developed, Retatrutide, acts on GLP-1 and two other obesity-related hormones and has been found to result in up to 22% to 24% body weight loss in clinical trials. If approved, it's expected to go on the market in 2027. An overview of drugs in the pipeline is provided below.

Chronic weight management pipeline

Chronic weight management pipeline

Source: IPD Analytics Market and Financial Insights, accessed in October 2023

Drug Manufacturer Administration Current status; Approval outlook
Oral semaglutide Novo Nordisk Oral once daily Phase 3; 2024
CagriSema Novo Nordisk Subcutaneous once weekly Phase 3; 2026
Orforglipron Eli Lilly Oral once daily Phase 3; 2026+
Retatutide (“triple G”) Eli Lilly Subcutaneous once weekly Phase 3; 2027
Danuglipron Pfizer Oral twice daily Phase 2; 2027+
Survodutide Boehringer Ingelheim, Zealand Subcutaneous once weekly Phase 2; 2027+
CT-868 Carmot Subcutaneous once daily Phase 2; 2027+
Pemvidutide Altimmune Subcutaneous once weekly Phase 2; 2027+
AMG 133 Amgen Subcutaneous once monthly Phase 2; 2027+

GLP-1 drugs are expensive, retailing for as much as $16,000 per year. Wegovy costs employers between $9,000 and $10,000 per patient per year after discounts and rebates.

New and more effective GLP-1 drugs are expected to be approved soon. It's to be determined how increased competition will impact net costs in this category. NovoNordisk said 80% of U.S. users are paying less than $25 out of pocket per prescription, so employers shoulder most of the cost.

GLP-1 drug overview

GLP-1 drug overview

Source: WTW Rx Collaborative data on file October 2023

GLP-1 obesity drug Instructions (dose frequency, route) Diabetes version Approx. weight loss Approx. annual net cost
Saxenda (liraglutide) Daily, injection Victoza 5% $9-10k
Wegovy (semaglutide) Weekly, injection Ozempic 15% $9-10k
Zepbound (tirzepatide) Weekly, injection Mounjaro 18% $9-10k

Coverage and management strategies

Employers must consider whether to cover these drugs for weight loss, as they are already widely covered for diabetes. Below are responses on coverage from the 2023 WTW Best Practices in Healthcare Survey.

Coverage for weight-loss drugs is about 65% in the WTW Rx Collaborative book of business.

In response to the runaway costs associated with GLP-1 drugs, some employers are planning to or considering access restrictions or withdrawing coverage. While removing coverage was uncommon in 2023, it's likely to become a consideration in light of the serious financial impact GLP-1 drugs have on employer-sponsored health benefits. Notably, some state-employee healthcare plans reviewed and removed coverage for weight loss.

For employers who will cover the drugs, there are strategies to manage costs.

Prior authorization: Pharmacy benefit managers and health plans provide prior authorization that requires documentation to gain drug access. Prior authorization ensures people who take diabetes drugs like Ozempic have diabetes and aren’t taking it off-label for weight loss. This helps to make sure there's enough supply of the drug for people who are stable on the medication for treating their diabetes, and it also helps employers manage their costs. In some instances, plan sponsors can use a custom prior authorization to set higher BMI thresholds to those with most severe obesity; however, doing so results in a loss of rebates from manufacturers.

This graphic summarizes data from 175 WTW employer clients from September 2023. Most employers (54%) continue to cover, and only 1% to 2% were considering or removing coverage.

Examples of management strategies for GLP-1 drugs include:

  • Limiting coverage to those with higher body mass indexes, who are expected to derive the most clinical benefit
  • Requiring members to participate in a weight management program before approval
  • Requiring members to try less expensive alternative weight-loss drugs before GLP-1
  • Limiting the network of prescribers to weight management experts or selective telemedicine providers
  • Setting higher cost-share requirements or putting in place lifetime payment maximums for GLP-1 drugs

Many vendors support weight management strategies. Established vendors, which historically have managed chronic conditions like diabetes, are now offering programs specifically designed for weight management, and new vendors are entering the market rapidly.

Many of the vendors incorporate a behavioral component and use food as medicine as an anchor to their approaches. Others are layering in the ability to prescribe drugs. Some are in progress with determining if titrating members off the drug can result in sustained weight loss, though this finding has been sustained in clinical practice.

In fact, most people who discontinue GLP-1 drugs regain a substantial amount of the weight they have lost.

Employers can consider additional management strategies for GLP-1 drugs. However, this could result in the loss of rebates to the plan and an increase in administrative costs. Regardless of chosen strategies, employers carefully monitor impact on utilization, PBM/vendor, and medical costs.

Supporting employees in their weight-loss goals

The decision to cover weight-loss drugs, including GLP-1 agonists, is an individual decision to be made by each employer. Though there are several potential benefits, and they are effective, they come at a significant cost. WTW consultants are helping employers of all sizes navigate this decision based on their unique population and needs.While the costs of GLP-1 drugs can be a concern, employers can explore strategies to manage these costs, such as implementing prior authorization or higher BMI thresholds, or considering weight management programs. By carefully evaluating the potential benefits and costs, employers can make informed decisions about covering GLP-1 drugs and ultimately supporting the health and wellness of their employees.

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