Slimming down the cost of obesity drug benefits

Injectable weight loss drugs Wegovy (semaglutide) and Zepbound (tirzepatide) have been flying off shelves, despite list prices exceeding $1,000 a month. Doctors wrote more than 1.75 million prescriptions for the two drugs in the first four months of 2024 alone. Indeed, sales of these and similar medications — collectively called GLP-1 agonists, initially approved to treat diabetes — are expected to hit $50 billion this year, which would make them the world’s top-selling drug class.

Sales may mushroom even further as evidence accumulates about the significant role these drugs might play in treating conditions ranging from alcoholism to Alzheimer's disease. Earlier this year, for example, the FDA approved the use of semaglutide to reduce the risk of an additional cardiovascular event in patients who are overweight or obese.

Not surprisingly, the pressing question for employers is how, or even whether, to cover GLP-1s for obesity. The answer is not straightforward. On one hand, these drugs can significantly reduce a condition that afflicts four in 10 U.S. adults and increases the risk of many other serious (and expensive-to-treat) health conditions. Yet the evidence is mixed on whether the overall health benefit is worth the cost, especially since half of people who started taking GLP-1s for obesity discontinued their use within 12 months. (For diabetics, the 12-month discontinuation rate was 35%.) When the drug is stopped, most of the health benefits derived from it are lost. 

Employers are facing significant pressure to provide coverage for GLP-1s, which is straining the manufacturers' ability to keep up with the demand. According to a May 2024 survey, 34% of employers were covering these drugs for obesity, up from 26% in 2023. However, this coverage comes at a high cost, with GLP-1s accounting for 8.9% of their total health claims expenses. As the shortages ease, claims costs are expected to rise.  Alliant’s Analytics practice has been monitoring the spending trend on GLP-1s and has observed a twofold increase in quarterly claim costs over the past two years, paralleled by the number of claimants using this class of drugs.

Alliant believes employers should be cautious about these drugs at such an early stage of their evolution. Specifically, we recommend developing guidelines to ensure that GLP-1s are limited to the patients who need them most and that benefit plans provide lifestyle support and incentives that encourage members to continue the therapies they have started.

“This is an amazing class of drugs that can do some amazing things,” says Dave Zieg, M.D., Alliant's National Director of Clinical Services. “But the surge in usage is being driven by social media and movie stars. We need to pause, step back, look at the clinical evidence, and use these drugs diligently.”

While there is no one-size-fits-all approach, here are seven strategies that can be considered in collaboration with a trusted advisor, a Pharmacy Benefit Manager (PBM), a health plan, and potentially a lifestyle management-focused point solution vendor:

1. Define criteria for eligibility.
The FDA has approved Zepbound and Wegovy for people with a body mass index (BMI) of 30, as well as those with a BMI of 27 who have a related condition, such as high blood pressure or sleep apnea. Some employers are choosing to impose a higher standard, such as a BMI of 32 or 35. Another approach is to limit GLP-1s to people who have already tried other, less expensive, drugs for weight loss, such as metformin, or to those who have engaged in formal exercise and diet programs.

2. Reduce wasted doses.
Limiting members to 30-day supplies will lessen the chances that expensive doses go unused.

3. Require lifestyle management programs.
Several vendors offer comprehensive programs to support patients who take GLP-1 medications. Services typically include coaching over video links, digital tools, and information and support on diet and exercise. The programs prioritize helping members manage side effects while also encouraging them to adhere to the therapy.

4. Designate certain prescribers.
Another way to ensure that members get the support they need is to require that GLP-1 prescriptions be issued by doctors in certain specialties, such as endocrinology, or even in designated practices.

5. Monitor adherence.
Check to see if members are filling prescriptions regularly. Those who aren’t may not be adhering to the program. For them, perhaps coverage should be denied.

6. Encourage member commitment.
Try to reduce casual usage with a communication program that highlights the potential side effects of GLP-1s and explains that discontinuing treatment will likely reverse any weight loss. Requiring a substantial copayment for GLP-1s can also help ensure members’ dedication to reducing obesity.

7. Ensure that program restrictions are enforced.
Most employers require that members get prior authorization before prescriptions for GLP-1s are filled. Double-check that the pharmacy benefit manager is reviewing each member's records to verify that all policy requirements are met before approving the medication.

It is important to note that while all these measures can help reduce the spend on GLP-1s, the impact is not always straightforward. A plan that imposes certain restrictions on access to these medications can reduce the rebate provided by the PBM, increasing the effective cost. Higher copays, moreover, may discourage compliance. One study found that every one percentage point increase in the out-of-pocket cost of the drugs coincided with a similar rise in the discontinuation rate.

The potential ROI of reducing obesity

Perhaps the biggest outstanding question regarding GLP-1s is what effect they will have on the many conditions linked to obesity, including heart disease, diabetes, and cancer. A person diagnosed as overweight or obese incurred an average of $12,588 in total annual health costs, two and half times more than someone without a weight-related diagnosis, according to a study of large-employer health plans.

“The whole industry is anxious to see how this is going to pay off on the medical side,” says Jennifer Dimura, Alliant's National Director of Pharmacy. “Just 20% of the population losing 15% to 20% of their weight could be incredibly significant for their health and employer costs.”

Yet even if those results prove out, Dimura says the current cost of covering GLP-1s in the U.S. cannot be justified by the potential savings. According to Alliant estimates, most U.S. employers have an effective cost of $650 to $800 a month for GLP-1s approved for obesity. “If a drug that worked this well for such a challenging condition cost between $100 and $200, it would be a no-brainer for everyone to cover,” Dimura says. “We’re just not there yet.”

In the coming years, the price of these medications may fall as competition increases; currently, more than 100 anti-obesity drugs are in clinical trials. Some of these medications will be pills rather than injections, which could lower manufacturing costs. Even today’s injectable drugs could be made cheaper. For example, the monthly cost of Ozempic, the diabetes version of semaglutide, ranges from $83 to $144 in Europe, compared to $936 in the U.S.

Employers, of course, can’t control the complex economic and other forces that determine pharmaceutical pricing in this country. What they can do, Dimura says, is design benefit programs that balance the real-world impact of GLP-1s with their effective costs. “Members don’t love encountering barriers to getting what their doctors say they need,” Dimura says. “But employers will not be able to continue to offer prescription drug benefits if high-cost drugs come onto the market with no controls.”

Additional Resources

Alliant’s Clinical Risk and Pharmacy teams excel in cross-practice collaboration. Our expertise, innovative yet pragmatic strategies, and evidence-based tools enable our clients to address unnecessary health plan utilization and drug spending while continuing to support member needs. Contact us to find out more.