The landscape of healthcare is continuously evolving, and employers are increasingly faced with decisions that impact both their bottom line and the well-being of their employees. One important decision is the coverage of GLP-1 medications, which are primarily used for managing diabetes and, more recently, for addressing excess weight and obesity. As these medications gain popularity, their high cost becomes a significant consideration for employers.
This article delves into the direct and indirect costs associated with GLP-1 medications and strategies for managing these costs.
The Prevalence and Economic Impact of Diabetes and Obesity
According to the Centers for Disease Control and Prevention (CDC), 38.1 million adults in the U.S. have diabetes contributing to $413 billion in medical costs and lost productivity in 2022 alone.
Obesity is also a growing concern. According to the CDC, nearly 74 percent of adults in the U.S. are either overweight or obese, costing the healthcare system more than $170 billion each year.
Given the significant health risks associated with obesity and diabetes, the need for effective treatment options is critical with relative market newcomers, GLP-1 therapies, offering a promising solution.
GLP-1 Therapies: Balancing Promising Efficacy and High Costs
GLP-1 medications, such as Ozempic (semaglutide), are highly effective in managing diabetes, improving blood sugar control, and reducing A1C levels. Studies indicate that these medications can lower A1C by 1-2 percent on average, which is substantial for diabetes management.
GLP-1 medications have also shown significant effectiveness in weight reduction. Clinical trials have demonstrated that these medications can lead to an average weight loss of 15-20 percent of body weight.
Effective management of diabetes and weight can lead to significant long-term healthcare savings. However, the immediate cost of GLP-1 medications often seems unsustainable.
The Direct Costs of GLP-1s Place a Growing Burden on Employers
A one-month supply of popular brand-name options, such as Wegovy or Ozempic, can cost as much as $1,400. On an annual basis, the cost could easily exceed $15,000 per patient. Besides the cost of the medication itself, there are additional direct costs to consider, such as regular monitoring and follow-up appointments required to ensure the medication is effective and safe.
Furthermore, patients may need supportive treatments or medications to manage side effects, adding to the overall expense.
The Indirect Costs of NOT Covering GLP-1s Are Equally Significant
Indirect costs, though less obvious, are equally important. Not providing coverage for GLP-1 medications can lead to health and financial risks, some of which include:
Adverse Health Events: Untreated diabetes can lead to severe complications, including heart disease, kidney failure, blindness, nerve damage, and an increased risk of infections. While untreated obesity can lead to cardiovascular diseases, type 2 diabetes, musculoskeletal issues, and sleep apnea.
Increased Healthcare Utilization: Such complications result in more frequent hospitalizations and emergency room visits. This strains healthcare providers and insurers leading to higher insurance premiums and reduced availability of resources for other patients.
Lost Productivity: Untreated diabetes and obesity may also contribute to increased rates of absenteeism and decreased productivity. One study found that costs associated with absenteeism were $891 higher per year for people with obesity compared to those with normal weight.
Competitive Disadvantage Attracting Top Talent: Employers that do not offer comprehensive healthcare benefits, including coverage for GLP-1 medications, may find themselves at a competitive disadvantage. In a job market where top talent is highly sought after, robust health benefits can be a significant factor in attracting and retaining employees.
More Employers Are Embracing GLP-1 Coverage for the Greater Good
As utilization of GLP-1s continues to rise, more employers are choosing to cover some or all of the cost for their employees. The International Foundation of Employee Benefit Plans (IFEBP), which surveys nearly 300 employers each year, found that employer coverage of GLP-1 drugs has risen by 8 percentage points since last fall.
The survey also revealed that:
- 57% of employers currently provide coverage for diabetes only (up from 49% in 2023)
- 34% of employers provide coverage for both diabetes and weight loss (up from 26% in 2023)
Employers must weigh the perceived versus actual benefits of covering these medications. Although initially expensive, the long-term savings from reduced healthcare costs and improved employee productivity can be substantial.
And with the right combination of proven cost management strategies coupled with a real-time view of cost and utilization, employers can be better positioned to mitigate costs.
How to Effectively Manage GLP-1 Costs
Employers can adopt several strategies to manage the costs of GLP-1 medications. Negotiating with Pharmacy Benefit Managers (PBMs) for better pricing and rebates is a crucial step. Implementing step therapy protocols, where employees must try less expensive treatments before GLP-1s, can help control costs. Prior authorization requirements ensure that these medications are prescribed only when appropriate, preventing misuse and overuse.
In addition to tried-and-true cost management strategies, PBM stakeholders also need greater visibility into exactly what is contributing to their GLP-1 costs.
Using Real-Time PBM Analytics and Reporting Tools to Make Informed Decisions
To manage GLP-1 costs effectively, PBM stakeholders need real-time insights into cost and utilization trends. Without this information, optimizing benefit designs becomes challenging.
Advanced analytics tools, such as Xevant’s GLP-1 Dashboard and our real-time alerting capabilities, provide the detailed insights needed for informed decisions on pharmacy benefits and employee health.
For example, with Xevant’s innovative GLP-1 Dashboard, clients can:
- Monitor therapy costs with monthly spend data
- Analyze trends in patient counts and prescriptions
- Gain actionable insights into prescribing patterns and demographics
This comprehensive dashboard ensures better visibility, enabling more strategic and efficient management of GLP-1 therapy costs.
Whether you’re an employer trying to rein in your GLP-1 costs or a consultant or PBM looking to advise your clients on the best course of action to keep GLP-1 costs in check, you can empower your team with Xevant’s real-time insights to manage the bottom line effectively.
Ready to learn how advanced analytics and reporting can help you keep GLP-1 costs in check? Talk to an expert.
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