As Interest in GLP-1 Drugs Spikes, Employers Weigh the Costs, Benefits

With the glucagon-like peptide-1 (or GLP-1) class of drugs now approved by the U.S. Food and Drug Administration (FDA) to treat obesity, expanding their use beyond the original purpose of diabetes management, demand for these drugs is skyrocketing — and employers are struggling to weigh the high costs of coverage.

All eyes are on GLP-1s, in part, because they are “relatively expensive drugs for a large population,” while many other high-cost drugs that make headlines are only applicable for a smaller group of people, said Cody Midlam, director in WTW’s Pharmacy Community.

Most Affordable Care Act marketplace health plans cover these drugs only for diabetes, meaning many of those taking them for weight loss are getting coverage through their employers. And with employer-sponsored health costs expected to reach their highest point in a decade in 2025 — due in part to coverage of pricey drugs such as GLP-1s — businesses are grappling with how to manage costs while meeting employee needs.

“Covering GLP-1s is really something that needs to at least be talked about by employers because it’s so prevalent in the industry right now,” said Julie Stich, vice president of content at the International Foundation of Employee Benefit Plans (IFEBP). “It’s front-and-center in a lot of employees’ lives.”

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Considerations to Manage the Costs of GLP-1 Coverage

Increasing Demand Poses Expensive Deliberations

Among the nearly 300 employers surveyed by the IFEBP for a recent study, 34% are now covering GLP-1 drugs for both diabetes management and weight loss, up 8 percentage points from 12 months ago. Meanwhile, 57% cover the drugs for diabetes only, also up 8 percentage points from the prior year — and 19% of those employers are also considering adding coverage for weight loss.

“Employers want to offer something for their members, but when they see the cost, they can’t afford it.”
— Cody Midlam, director, WTW Pharmacy Community

Employers reported that 8.9% of their annual claims are for GLP-1 drugs prescribed for weight loss, up from 6.9% the year before.

A May 2024 KFF Health Tracking Poll of 1,479 U.S. adults showed 13% have used a GLP-1 medication. The high price is suspected to be the main reason more individuals aren’t using the drugs — they generally cost more than $1,000 a month, a factor that is driving many employers’ hesitation to cover them.

“Many employers are not covering GLP-1s or not adding more coverage due to cost,” Midlam said. “Employers want to offer something for their members, but when they see the cost, they can’t afford it.”

Weighing the Long-Term Benefits

While GLP-1 drugs were originally developed to treat diabetes by managing blood sugar levels, they now are commonly prescribed to also treat obesity. In addition, they are being explored for their implications in reducing the risk of cardiovascular disease and cancer, and treating high blood pressure, kidney disease, autoimmune diseases and other conditions such as sleep apnea, fatty liver disease, Alzheimer’s disease, smoking cessation and substance use disorder.

“We’re really on the cusp of understanding more about the science and what GLP-1s do, what they don’t do, what they can do,” said Ilyse Schuman, senior vice president of health and paid leave policy at the American Benefits Council.

In addition to the drugs’ potential direct implications in treating those conditions, employers also are considering the possible longer-term health effects of treating obesity, such as reduced risk of chronic conditions — which can lower health costs in the future given the prevalence of obesity and the cost of not treating it, Schuman said.

While the cost of GLP-1 coverage is top of mind for employers right now, they should not forget to factor in the significant cost of obesity-related complications, said Elina Onitskansky, the founder and CEO of obesity treatment company Ilant Health.

According to Ilant Health:

Obesity is expected to affect half of U.S. adults by 2030.
Direct and indirect healthcare costs related to obesity are more than $1.7 trillion annually.
The loss in productivity each year from missed work, disability and early death related to obesity costs employers more than $11 billion each year.

“Obesity drives multiple healthcare costs,” Onitskansky said. “Employers who address obesity treatment effectively can drive significant value in their costs and employee satisfaction.”

Businesses can expect to see even greater interest in GLP-1s and related medications, Midlam said — and more employees who prioritize coverage of them when considering where to work. That makes the GLP-1 coverage equation a timely and salient consideration for total rewards professionals.

“The pipeline is very full of weight-loss drugs, and [the] pharma [industry] is focusing on this class of drugs — it won’t be going away anytime soon,” Midlam said. “It’s incumbent on employers now to start navigating how to cover the drugs in the most cost-effective manner.”

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