The realities of employer coverage for weight-loss drugs

Drugs used to treat diabetes have soared in both popularity and cost for a new reason: weight loss. Following a media frenzy surrounding these pharmaceuticals, prescription medications such as Ozempic, Wegovy and Zepbound are in high demand among non-diabetics looking to take the drugs for weight loss.

While survey results show the number of employers covering GLP-1 drugs is expected to nearly double in 2024, deciding to cover the drugs is a timely – though complicated – decision. Plan sponsors must weigh the pros and cons of expanding coverage as they determine if the change makes sense for their organization’s unique needs.

How does obesity medication work?

Though GLP-1 drugs such as Wegovy and Zepbound have been approved for weight management in adults who are obese or overweight, others, including Ozempic, are currently only approved for the treatment of diabetes. Both Wegovy and Ozempic have the same active ingredient, semaglutide, but the dosage varies between the drugs.

GLP-1 drugs are injected once a week and suppress users’ appetite, however, they are not designed for short-term use. When users stop injections, their appetites return to normal and they typically regain the weight lost. Consequently, people looking to use the drugs to treat obesity need to continue injections indefinitely in order to maintain their weight loss.

Why employers are hesitant to add coverage

Despite increased demand for weight-loss drugs, employers need to be aware of what consequences they will face by adding coverage of them to health plans.

One major deterrent is the drugs’ high cost. As noted by Scientific American, weight-loss medication can “cost $1,000 or more per month out of pocket” for users. Most private insurance companies do not cover weight-loss drugs, meaning employers would be expected to shoulder the expense. When coupled with the fact that these drugs are not designed for short-term use, employers must consider whether their budget can account for long-term coverage of the drugs.

The high costs were proven to be too high for some companies, as many organizations that initially offered coverage have since revoked it, according to the Wall Street Journal. As costs continue to rise, long-term coverage may be unsustainable for some companies.

Benefits of offering coverage

For some employers, certain benefits of increasing coverage for obesity medication outweigh the cons of a high price tag.

As demand increases among the general public, covering weight-loss drugs could prove to be a powerful differentiator when it comes to recruiting. Getting ahead of the curve and offering coverage could potentially help employers attract top talent and get a leg up over competitors.

Failing to address obesity may come at its own cost. According to a study, adults with obesity experience “higher annual medical care costs by $2,505 or 100%,” which plan sponsors must take into account when planning their spend. Offering coverage for weight-loss drugs could potentially help plan sponsors mitigate costs associated with obesity in the future.

Lifestyle changes may need to come first

Some employers are working to compromise with participants interested in taking drugs for weight loss. As noted by Politico, certain organizations are requiring health plan members to first participate in a clinical lifestyle program before they would cover the drugs in question.

By adding this barrier to entry for coverage, employers are hoping they can meet demand for the medication while also controlling their overall costs. As weight-loss drugs rise in popularity, similar holistic solutions may prove to be key for employers as opposed to just writing a prescription.

Related: Grappling with weight loss drug coverage? Options to help employers control costs

Balancing act of priorities

For plan sponsors, deciding whether or not to cover obesity medication in their health plan is a complicated decision. While some employers are deterred by the drugs’ high price tag, others may prioritize their ability to help attract talent and encourage healthier living.

Christopher O’Shea is an Employee Benefits Consultant for Sentinel Group.