A Shift in the GLP-1 Conversation
A recent Wall Street Journal article highlighted a growing trend in employer-sponsored healthcare: “More than a quarter of big companies say they are adding criteria this year or next, while 11% have dropped or are planning to drop coverage for weight-loss purposes altogether.”
As GLP-1 use continues to grow, employers are facing increased pressure to balance employee access with the significant and often unpredictable costs associated with these medications.
What trend is the market really experiencing? Are employers moving toward eliminating GLP-1 coverage for weight loss altogether, tightening eligibility requirements, or exploring more sustainable ways to provide access?
Ethica’s Take
At Ethica, we’re seeing employers move beyond the question of whether to cover GLP-1 medications for weight loss. Instead, they’re focused on how to provide sustainable access while managing long-term costs and maintaining a meaningful employee benefit.
Why Employers Are Reevaluating GLP-1 Coverage
The Challenge of Long-Term Utilization
Employers recognize that these medications may be considered life-long therapies. They are trying to plan for continued utilization, and at the same time ensure they are receiving the best possible price for the medication.
As employers evaluate the long-term financial implications of GLP-1 coverage, many are also paying closer attention to how these medications are priced and purchased. Employers are aware that Novo Nordisk and Eli Lilly, the manufacturers of the most used GLP-1s, offer their drugs at discounted rates when patients purchase the drugs directly from the manufacturer. Unfortunately, that same pricing may not be available to employers through their PBM formulary arrangements.
Cost Is Only Part of the Equation
While cost remains a primary concern, employers are evaluating the clinical management needed to help employees successfully use GLP-1 medications. Side effects and affordability concerns can lead some individuals to discontinue treatment, making education and ongoing support important components of a successful GLP-1 strategy.
It’s Not Just About Dropping Coverage
Many employers are discovering that GLP-1 coverage is not an all-or-nothing decision. Instead, they are evaluating strategies that balance employee access with long-term affordability.
- What approach are employers adopting today?
Coverage through the PBM formulary with utilization management strategies in place remains the most utilized mechanism for ongoing coverage of GLP-1s for weight loss. Employers are beginning to evaluate “Point Solutions” outside of the PBM to help their GLP-1 offering.
- Which strategies appear most sustainable?
Strategies that allow employers to define their contribution toward each GLP-1 claim may provide greater financial predictability and long-term sustainability.
Exploring New Access Models
As employers look for more sustainable ways to manage GLP-1 costs, some are exploring alternative access and funding options.
With the DTC option, the GLP-1 weight loss drugs would not be covered by the Plan and there would be no contribution made by the employer. The employee would visit the manufacturer website to get started and order their medication through the manufacturer. The manufacturer pays the fees for dispensing and shipping, and the employee is only responsible for the cost of the drug.
With DTE, the employer chooses a vendor to work with who provides clinical oversight or enrollment stipulations and also is able to access DTC pricing. The employer would set a contribution towards each fill of the GLP-1 medication for the employee. The employer would also be responsible for any vendor fees, and the fees for dispensing and shipping are passed through to the employer as well.
The primary advantage of these solutions is the potential for lower net drug costs compared to traditional pharmacy benefit models that rely on manufacturer rebates. Disadvantages may include a less seamless member experience. Costs may not apply toward deductibles and out-of-pocket maximums, and members may need to use designated pharmacies. Direct purchasing may also require employers to engage alternative vendors or add capabilities to support member services and utilization management. Employers should evaluate each program carefully and ensure it does not create legal or compliance concerns.
Are these models replacing traditional coverage or working alongside it? The DTC and DTE models would replace traditional formulary coverage of the GLP-1 weight loss medications.
How should employers assess vendor solutions?
When evaluating GLP-1 and weight management vendors, employers should consider several key factors, including the vendor’s clinical model, pricing transparency, integration with existing pharmacy benefits, and reported outcomes.
Additional considerations may include:
- Enrollment minimums
- Implementation fees
- Contract duration
- Performance guarantees
- Early termination provisions
What should employers consider when determining the right GLP-1 strategy for their organization?
There is no one-size-fits-all approach to GLP-1 coverage.
Projected utilization and employee retention are two important factors when evaluating GLP-1 strategies. Employers with longer employee tenure may be more likely to realize the long-term benefits associated with weight loss, as improvements in health outcomes have more time to be reflected in medical plan data.
The goal isn’t simply lower costs or broader access—it’s finding a strategy that delivers both.
Key Takeaways
Solutions and programs are continuing to flood the market, making it more important than ever for employers to stay informed. As new pricing strategies, funding models, and vendor solutions emerge, employers that take a thoughtful approach to evaluating their options will be best positioned to control costs while continuing to provide meaningful access to care.
