As your broker, I need to have a candid conversation with you about one of the most challenging benefit decisions you’ll face this year: GLP-1 medications like Ozempic, Wegovy, and Mounjaro.
Your employees are asking about them. Your pharmacy costs are climbing. And you’re caught in the middle trying to do right by your team while keeping your business financially healthy. Let’s break down what’s happening and explore practical strategies to navigate this together.
What’s Driving the Demand?
GLP-1 medications have become a cultural phenomenon. Originally developed to treat Type 2 diabetes, drugs like semaglutide (Ozempic, Wegovy) and tirzepatide (Mounjaro) have proven remarkably effective for weight loss. We’re talking
15-20% body weight reduction in clinical trials: results that were previously only achievable through bariatric surgery.
Your employees have seen the headlines. They’ve watched celebrities transform. They’ve heard coworkers share success stories. And now they’re wondering:
Does my health plan cover this?
The demand is real, and it’s not going away.
The Cost Explosion: By the Numbers
Here’s where things get complicated for you as an employer. The spending growth on GLP-1 medications has been nothing short of explosive:
- Overall GLP-1 spending grew over 500% from 2018 to 2023
- Total spending jumped from $13.7 billion to $71.7 billion in just five years
- Ozempic alone went from $410 million to $26.42 billion in spending
- Wegovy surged from $580 million in 2021 to $6.99 billion by 2023
Before rebates and discounts, these medications cost
over $1,000 per month per patient. That’s
$12,000+ annually for each employee who takes them.
If you have 50 employees and just 5 of them start taking a GLP-1 medication, you’re looking at a potential
$60,000 annual increase in pharmacy costs. Scale that up, and you can see why this has become one of the fastest-growing contributors to employer pharmacy spending.
Where Employers Stand Right Now
Despite the cost pressures, many employers have been expanding coverage. In 2024:
- 44% of employers with 500 or more employees covered weight-loss medications
- 64% of employers with 20,000 or more employees offered coverage
- These numbers increased from previous years
However, industry experts are warning that this upward trend in coverage expansion
may slow or even reverse as costs continue to climb. You’re not alone if you’re feeling squeezed.
When Will Costs Come Down?
I wish I had better news here. Generic versions of the leading GLP-1 products are
more than five years away. Patent protections and the complexity of manufacturing these biologic drugs mean relief isn’t coming soon.
That said, there are some developments on the horizon:
Within the next 12-18 months:
- Two oral formulations from Novo Nordisk and Eli Lilly are expected to receive FDA approval
- These could offer more affordable options at lower price points
- Starting doses of upcoming oral GLP-1s may cost as little as $149 monthly
Recent Medicare negotiations have also shifted the landscape:
- Medicare beneficiaries now pay a maximum $50 monthly copay for injectables
- Self-pay costs are dropping from over $1,000 to around $350 initially, declining to $250 within two years
While these changes primarily affect Medicare and self-pay patients, they signal that pricing pressure is building across the market.
Strategies to Balance Demand and Cost
As your broker, I’m working daily to help clients like you find the right balance. Here are the approaches I’m recommending:
1. Implement Prior Authorization Requirements
Requiring prior authorization ensures these medications go to employees who will benefit most. Typical criteria include:
- BMI of 30 or higher (or 27+ with weight-related conditions)
- Documentation of previous weight-loss attempts
- Commitment to lifestyle modifications alongside medication
This isn’t about denying care: it’s about ensuring appropriate use.
2. Consider Step Therapy Protocols
Step therapy requires employees to try more affordable options first before moving to higher-cost medications. This might mean starting with older, less expensive weight-loss medications before approving GLP-1s.
3. Explore Carve-Out Programs
Some PBMs and specialty pharmacy programs offer GLP-1 carve-outs with better pricing and management. These programs can include:
- Negotiated pricing below standard rates
- Enhanced clinical oversight
- Required participation in coaching or wellness programs
4. Require Participation in Lifestyle Programs
Pairing GLP-1 coverage with mandatory enrollment in nutrition counseling, fitness programs, or health coaching can:
- Improve long-term outcomes
- Reduce the likelihood of weight regain if medication is stopped
- Demonstrate to employees that you’re investing in their overall health
5. Set Coverage Limits
Some employers are implementing time limits on GLP-1 coverage (such as 12-24 months) or requiring periodic re-evaluation to continue coverage. This approach acknowledges that these medications may not need to be taken indefinitely for all patients.
6. Communicate Transparently
Whatever you decide, clear communication with your employees is essential. Explain your coverage decisions, outline what’s required for approval, and help employees understand the
why behind your policies.
The Case for Coverage
Before you decide to exclude GLP-1s entirely, consider the potential upside:
- Obesity is linked to higher costs for diabetes, heart disease, joint problems, and more
- Effective weight loss can reduce these downstream costs over time
- Offering coverage can be a recruitment and retention advantage in a competitive labor market
- Employees who feel supported in their health goals tend to be more engaged
The ROI calculation isn’t straightforward, but there’s a legitimate argument that strategic GLP-1 coverage could pay for itself through reduced long-term health costs and improved productivity.
The Case for Caution
On the other hand, there are valid reasons to proceed carefully:
- The medications only work while you’re taking them: many patients regain weight after stopping
- Long-term safety data is still emerging
- The cost burden could force you to cut other valuable benefits
- Not every employee who wants the medication truly needs it
There’s no one-size-fits-all answer here.
What I Recommend
As your broker, here’s my honest advice:
don’t make this decision in isolation.
Every employer’s situation is different. Your workforce demographics, current health plan costs, company culture, and budget all factor into the right approach for you.
I recommend we sit down together and:
- Review your current pharmacy spend and GLP-1 utilization
- Model different coverage scenarios and their cost implications
- Evaluate program options from your PBM and carrier
- Develop a communication strategy for your employees
- Create a policy that balances compassion with fiscal responsibility
Let’s Talk
The GLP-1 conversation isn’t going away. Your employees will keep asking, and the cost pressures will continue until generics hit the market years from now.
The good news? You don’t have to figure this out alone. As always, I am here to help you navigate these complex decisions and find solutions that work for both your business and your people.
Reach out to schedule a conversation about your GLP-1 strategy. Together, we’ll find the right balance for your organization.
