GLP-1 Costs Weigh on Employers, Forcing Coverage Considerations

As demand for glucagon-like peptide-1 (GLP-1) medications soars, so do health insurance costs. According to a research report from Business Group on Health, this situation has 80% of employers actively considering how to balance costs and care.

The nonprofit organization’s study, which examined coverage of GLP-1s specifically for weight management, was performed in February and March, and included a survey that was completed by 105 of their employer members.

Nearly 80% of those survey respondents reported GLP-1s are driving an increase in their company’s healthcare costs. While most of these employers currently cover these drugs for diabetes, fewer (67%) cover them for weight loss; and of the latter group, only 72% are likely to continue this coverage next year.

Among other key findings:

• More than half of employers that cover GLP-1s for weight management expect the expensive medications to yield significant clinical benefits, but few have seen evidence of those (e.g., a reduction in obesity rates, fewer employees needing bariatric surgery) within their aggregated claims.
• 87% of employers anticipate availability of an oral alternative will result in higher overall drug demand, but only 9% of employers anticipate this will trigger a price decrease.

Access a related Workspan Daily Plus+ article on this subject:

• Strategies to Improve GLP-1 Health Outcomes and the Bottom Line

‘Finding the Right Balance’

The rise in GLP-1 usage is fueled by therapeutic effectiveness as well as an abundance of information via marketing, press and word-of-mouth, said Business Group on Health vice president Pamela Rich.

“Finding the right balance between managing the costs of GLP-1s and providing benefit access to these medications may look different for every employer,” she said. “In addition, the GLP-1 space is continuing to evolve.”

Known by brand names such as Ozempic, Wegovy, Mounjaro or Zepbound, this medication class was originally developed to help regulate blood sugar in people with Type 2 diabetes, but studies have connected the drugs to substantial weight loss for people with obesity. They also show promise in helping manage other conditions, such as cardiovascular disease, obstructive sleep apnea and substance use disorder.

“These drugs are dramatically more effective for weight loss than anything that came before, and the eligible population is huge,” said Luca Maini, an assistant professor of healthcare policy at Harvard University Medical School. “The set of indications also keeps expanding, which broadens the pool further.”

Maini expects employers to lean hard on prior authorization processes and pharmacy benefit managers (PBMs) to negotiate for more favorable pricing, and predicts most plans will end up covering only one manufacturer’s drugs (e.g., those from Eli Lilly or Novo Norodisk), with each PBM preferring the option that gives them the best contract terms.

Monitoring the Trends

According to Cody Midlam, a director and pharmacist consultant at consulting firm WTW, there are some signs that GLP-1 demand is leveling out. He stated utilization increased 300% from 2022 to 2024 before moderating to a 50% increase in 2025.

Midlam said total claim volume, though, likely will remain high, citing:

• A high number of patients transitioning to maintenance use; and,
• A projected spike coinciding with oral drug introductions, which will allow people who are averse to injections to try the medications.

“The drugs are widely used because they work well for most patients,” he said. “The pipeline is also deep with even more effective products, which will continue to drive consumer demand.”

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