A surge in demand for pricey, new and highly effective anti-obesity medications could put a financial strain on employers who sponsor their employees’ health plans.
Employers have long offered coverage for certain weight loss tools, such as bariatric surgery if employees qualify for the drastic procedure that requires surgery. Other medications that have been on the market for a while have limited effect, don’t work for everyone and can have some serious complications.
But a new class of medications that has hit the market in the last few years has proven extremely effective in helping people lose weight. As a result, drugs like Novo Nordisk’s weight loss specific Wegovy and Saxenda, along with Ozempic, a diabetes medication are on high demand.
There’s one big catch: These drugs are costly, putting employers in a quandary. They want to attract and retain high quality talent, but they don’t want to break the bank on their employee benefit offerings.
What are these medications?
This class of pharmaceuticals, known as glucagon like peptide agonists (GLP-1s), have been shown to be highly effective in helping people lose weight. Since the news spread of how effective they are, demand for these medications has skyrocketed.
Just three years ago, few people had heard of these medications, and they were not often prescribed, but that’s all changed. For example, the medication Semaglutide, known under the brand Ozempic, Wegovy and Rybelsus, was the fourth most prescribed drug in terms of total cost in 2021 at $10.7 billion, an increase of 90% from the year prior, according to a report in the American Journal of Health System Pharmacy. While many of these medications are injectable, some, like Rybelsus, come in pill form.
Shocking costs
Experts warn that if more workers seek out these medications, payer outlets will spike, resulting in higher group health plan premiums for employers. The list price of Wegovy is $1,350 per package, which breaks down to approximately $270 per week or $16,190 per year. That said, obesity has its own cost, and proponents of these medications point to the potential for reduced cost on the back end if people lose weight and keep it off.
Medical cost of obesity in the United States were $173 billion in 2019, according to the Centers for Disease Control.
An unsustainable trend
It’s estimated that about 60% of large employers’ health plans cover one of these medications, although without restrictions, including minimum body mass index (BMI) requirements and prior authorization. Health plans may require enrollees who qualify for obesity care to first use other lower priced anti-obesity drugs before they move to a GLP.
The American Gastroenterology Association recommends weight loss drugs for anyone who has a BMI over 30, or 27 if they have other medical complications, such as heart diseases or diabetes. According to the CDC, 42% of Americans have a BMI over 30.
As the uptake of these medications increases, employers and their health plans will need to make painful choices of to what extent these medications should be covered. Insurers are already considering ways to ensure that people who will most benefit from these drugs have access to them.