Lately, there has been a significant uptick in the popularity of GLP-1 drugs like Ozempic and Wegovy. Boasting jaw-dropping results and a slew of celebrity praise, these injectable medications have gained a cult following in the world of weight loss. Although these medications were originally developed for managing diabetes, their surging demand is causing a dilemma for employers: should they include these relatively costly drugs in their health insurance plans? This decision becomes even more complex due to competing priorities. Many employers are trying to manage rising healthcare costs while also providing appealing benefits to attract and keep talent in a highly competitive job market. But the challenges go beyond that. The question of GLP-1 coverage is making us rethink how we approach weight management at work and pushing us to redefine our understanding of whole person wellbeing.

GLP-1 (glucagon-like peptide-1) drugs, initially developed to manage blood glucose levels in individuals with type 2 diabetes, have shown an additional benefit of aiding weight loss. These medications mimic the action of the natural hormone GLP-1, which regulates blood sugar levels by stimulating insulin release and inhibiting glucagon. While the precise mechanisms of weight loss are not entirely clear, GLP-1 agonists are believed to reduce appetite, delay stomach emptying, and may decrease body fat, particularly in the abdominal area. This can be important because excess abdominal fat elevates the risk of various health issues, including type 2 diabetes and heart disease. Currently, few GLP-1 drugs are FDA-approved for the treatment of obesity, though they are increasingly being prescribed off-label for weight management.¹

Topping the list of considerations for GLP-1 coverage is price. And for good reason. Prescription GLP-1’s cost more than $1k per month on average. Which creates obstacles on both sides of the coin. The absorbent price tag makes insurance coverage highly coveted by employees. Yet, in most instances weight loss drugs are not widely covered by employers: data from the International Foundation of Employee Benefit Plans (IFEBP) finds that fewer than a quarter cover any prescription drug specifically for weight loss, although that number is higher for employers with 5,000 or more employees.² Thereby, for some organizations, offering the coveted coverage could help create competitive advantage.

However, demand must also be considered. While the phenomena of GLP-1 drugs continue to draw attention, a significant number of employees using the drugs could substantially hike drug costs for employers.

To make matters more complicated, these drugs are not designed to be effective with only short-term use. Studies show the weight remains at bay with the continuation of the drugs, suggesting long-term use and for employees—an elevated price tag for employers.

The question of whether to provide coverage for GLP-1 drugs is just one piece of a broader conversation surrounding weight loss support in the workplace. This discussion also extends to what should be covered, what should be excluded, and how to effectively address weight loss efforts among employees.

Traditionally, workplace weight loss initiatives have centered around physical wellness such as step challenges, biometric screenings, and weight loss competitions. However, the perspective has started to shift in recent years, with many now acknowledging obesity as a disease. Offering gym memberships or organizing walking challenges is no longer sufficient. There’s a growing understanding that addressing weight-related concerns requires a more comprehensive approach.

This recognition is altering the dialogue among employers about how best to tackle it. Questions arise: What about bariatric surgery? Should weight loss drugs be included in tangent with nutritional coaching and support?

Supporting employees in shedding excess weight holds significant advantages. By addressing obesity and facilitating weight loss, employers may gain better control over expenses relating to conditions such as high blood pressure or Type 2 diabetes. This not only promotes employee health and productivity but also reduces healthcare costs for employers. Obesity can significantly impact a company’s financial bottom line, with a quarter of U.S. employers identifying it as the leading factor affecting overall healthcare costs, according to 2022 data from IFEBP.³

Among benefits providers, there’s a growing consensus that we should move beyond the stigma associated with weight and instead focus on providing support, practical solutions, and understanding. This shift in perspective aligns with the concept of whole-person wellbeing, recognizing that employees’ physical health and mental wellbeing are interconnected and interdependent.

Employers have options regarding how or whether to cover these medications. All options include tradeoffs, and the best approach may vary depending on the organization’s unique circumstances and priorities.

Employers opting not to include coverage for anti-obesity medications can expect reduced drug costs and improved control over member premium increases. Nonetheless, some of their members may pursue off-label prescriptions for variations of these drugs authorized for diabetes management. Higher-wage and highly educated members are more inclined to explore this avenue, potentially exacerbating inequalities in access to treatment. Employers should be mindful that they face challenges in terms of recruitment and retention if competitors provide coverage for these medications, potentially putting them at a disadvantage.

Individuals with severe obesity often get the most benefit from anti-obesity meds. This has led some employers to think about increasing the BMI level needed to qualify for coverage. Doing this might lower the overall drug costs, and more people who get treated could save money on healthcare. However, it’s worth noting that individuals with BMIs below the adjusted threshold might seek alternative solutions, such as off-label usage of diabetes medications.

Certain employers may provide coverage for these medications while implementing stringent criteria, including prerequisites such as prior medically supervised diets and a mandatory trial of more affordable anti-obesity drugs before approval. It’s important to acknowledge that prior authorization requirements are often met with dissatisfaction from employees and healthcare providers. In some cases, this approach might not prevent prescriptions but lead to delays in obtaining them.

Employers can include coverage for these medications, like the coverage of other prescribed drugs. It’s important to acknowledge that the overall drug costs may be relatively high but will likely result in high member satisfaction. Additionally, offering such coverage could give your company a competitive advantage when recruiting and retaining top talent.

This new class of weight loss medications represents a significant advancement in medical care. However, companies must consider the potential cost implications of including these medications in their health plans. As a result, businesses should thoroughly assess their benefit designs and consider implementing programs to manage potential increases in drug-related expenditures.

Deciding where you stand on GLP-1 drugs begins with thinking about where your organization stands on weight loss. Consider your population’s needs, organizational goals, and even talent attraction and retention initiatives. It’s about striking the balance that works for your organization.

At MJ, we can help you weigh your options and figure out where weight loss drugs and GLP-1’s fit into your goals and plan. We recognize the importance of these decisions, which is why we offer data-driven insights to help you make informed choices. Our exclusive analytics tool, APERTURE, enables us to offer industry benchmarking and a thorough understanding of how modifications to your plan can affect different facets of your organization.

Our data-driven, holistic approach to benefits consulting enables us to tailor solutions aligned to your unique organizational goals.

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