Employers Struggle with Health Insurance Coverage for Weight Loss Drugs as Demand Soars
The demand for weight loss drugs is skyrocketing, leaving many employers in the United States grappling with health insurance coverage issues for their workers. Drugs like Novo Nordisk’s Wegovy and Eli Lilly’s Zepbound, which were historically used to treat diabetes, have gained broader appeal among consumers seeking weight loss solutions. While some employers are providing coverage for these drugs, often with limitations, others are struggling to determine how to cover them without breaking the bank.
According to a survey conducted by the International Foundation of Employee Benefit Plans, only 27% of respondents provided coverage for weight loss drugs, compared to 76% who provided coverage for diabetes drugs. However, 13% of plan sponsors indicated that they were considering coverage for weight loss. The main concerns for employers include the high costs of these drugs, the lack of long-term data on effectiveness and potential side effects, and the need for more information before making coverage decisions.
Despite these challenges, many benefits experts believe that it’s only a matter of time before more employers start covering GLP-1 drugs. The prescription volumes of these weight loss drugs are soaring, with Novo Nordisk recently becoming Europe’s largest publicly traded company due to investor enthusiasm about the obesity market. Eli Lilly’s recent launch of Zepbound has also been successful, generating $175.8 million in sales for the fourth quarter. Analysts predict that Zepbound could become the biggest drug of all time, with sales potentially exceeding a billion dollars in its first year on the market.
The elephant in the room when it comes to covering weight loss drugs is the cost. With prices ranging from $1,000 to $1,500 a month, employers could be paying up to $18,000 per year for just one employee’s supply of these drugs. For larger companies that are self-insured, this cost becomes a major issue. Some states have the option to cover weight loss drugs under Medicaid, but coverage can vary. Medicare, on the other hand, doesn’t cover weight loss medications, except for patients with Type 2 diabetes.
Employers that are already covering weight loss drugs believe that it’s worth it. According to a survey by Accolade, 99% of companies that currently cover GLP-1 drugs plan to continue doing so. These employers cite higher employee satisfaction and well-being, increased engagement in other well-being programs, and improvement in other health conditions as reasons for covering these drugs.
However, there are still questions about how to design the coverage plans for these drugs. Employers have to consider factors such as utilization within the company, who should be covered, and whether there should be limitations based on factors like obesity diagnosis or BMI. The majority of companies that cover these drugs require insured members to meet certain criteria before coverage is approved, such as prior authorization, step therapy, and specific eligibility requirements. The potential long-term costs to employers are also a concern, as the duration of treatment and its effectiveness are still unknown.
For consumers whose companies don’t cover weight loss drugs, the options are limited. Many will have to pay out of pocket or seek assistance through manufacturer savings programs. Novo Nordisk and Eli Lilly offer discount programs for eligible patients, potentially saving them hundreds of dollars. However, looking overseas for cheaper alternatives is unlikely to be helpful at the moment due to shortages in other countries.
Despite the challenges, benefits consultants expect the coverage problem to eventually resolve itself as the need for these drugs and their long-term benefits become more apparent. The evidence suggests that GLP-1 drugs can help people lose weight and prevent serious illnesses like stroke and heart attack. It’s only a matter of time before most companies start covering these drugs in some fashion to provide their employees with the benefits they need.
