The Rising Tide of GLP-1 Costs: Can Your Health Plan Stay Afloat?

Co-authors:

• Phil Baker, PharmD

If one pharmacist calls another and asks if they have any of this year’s most popular drug, they don’t even have to say a name. It’s probably a GLP-1. 

About 12% of U.S. adults have taken some type of glucagon-like peptide agonist medication. Drugs like Ozempic, Wegovy, Mounjaro, Zepbound, or their compounded identical generics (like semaglutide injections) are popular because of their effectiveness and in spite of their usually high cost. 

The big question is, how should health plans handle these increasing costs?

What are GLP-1s?

Originally, these medications were the result of an effort to help optimize glycemic control in diabetic patients. But as trials progressed, it was obvious that patients were losing weight – relatively quickly.

Our bodies have a lot of GLP-1 receptors. One of those has to do with our appetite. It’s responsible for our brain telling our bodies that we’re full, that it’s time to stop eating. This receptor also helps slow gastric emptying, ultimately reducing what’s coming in throughout the day. Lastly, this receptor improves our body’s sensitivity to insulin – which is why it was initially targeted for diabetes control.

For diabetic patients
Patients with diabetes are often encouraged to lose weight. It usually helps with their glycemic numbers. This medication was doing both! It helped control these patients’ glycemic numbers AND helped them lose weight.

For overweight or obese patients
The weight loss component of these medications opened up a whole new group of potential patients: anyone considered overweight or obese. But in most cases, we’ve seen that patients exclusively seeking weight loss usually need higher doses of the same drug.

Side effects
Once you start adding things into your body, you’ve got to consider side effects. You’ve probably heard of gastrointestinal issues, which can be common among weight loss patients using these medications. It’s less common among diabetic patients, who usually need lower doses of the same drug to achieve the desired result. Gastrointestinal side effects may include constipation, biliary disease, bowel obstruction or gastroparesis, among others. 

Side effects like constipation directly relate to how these drugs work. If we’re slowing the rate of gastric emptying (and thus how quickly the body gets rid of waste), there’s going to be a risk of constipation. Where we need to be careful is if patients experience impaction – because our bodies were designed to get rid of waste.

There’s also a noted risk for thyroid cancer. Although we haven’t seen that in humans yet, it was a side effect noted in animal studies. It’s too early to determine whether similar tumors may appear in humans using GLP-1 drugs, but the FDA did require that the drugs include that warning. The question really arises with the much higher doses being given to weight loss patients versus those with diabetes. 

Long-term considerations
Because these drugs are so new, there are a lot of long-term considerations we don’t have solid answers for yet. Consider:

1. Will weight loss patients have to take these drugs forever? Maybe. One thing these drugs do is reduce the size of fat cells. But in shrinking them, it multiplies how many a body actually has. When patients stop taking it, they may experience what we call “Ozempic rebound,” when those fat cells could potentially expand again. With the data we have so far, this appears to be anywhere from a 10-15 pound, on average, weight gain after stopping the drugs. 
2. Is there a risk to (or for) pregnancies? Pregnancy is a very interesting topic here. The drug is not recommended for anyone who is pregnant or who may become pregnant. But a number of pregnancies have been reported in people who were taking them! It makes sense from a clinical standpoint. Patients who are overweight or dealing with PCOS (polycystic ovarian syndrome) probably also have an insulin insensitivity. But the medication can reduce weight and improve insulin sensitivity, thus improving the chances of pregnancy. It’s something I think we as clinicians need to educate our patients about – especially females of childbearing age.
3. What about the impacts to muscle mass and connective tissue? You’ve probably seen articles talking about “Ozempic face.” We don’t tend to think about the physiological impacts. But as you lose weight, you also lose muscle mass and connective tissue, which can cause that “droopy” look. One of the bigger concerns, to us as pharmacists, is the loss of bone density.

The Costs to Health Plans

There are a variety of GLP-1 drugs on the market. Most of them are taken in a self-administered injectable format. They’re costly, effective, and popular. So how does it affect your plan? 

Coverage for these medications varies. Some people opt to pay for them in cash. Some health plans approve the cost for diabetes, but not weight loss. Either way, considering the cost of these medications and the prevalence of both diabetes or obesity within a population, there is a potential for significant costs for the payers – employers, employees or health insurance companies. 

How much is that cost? It depends on the specific drug your plan members take and why they take it. But, on average, Ozempic can cost about $12,000 per year per patient.

Payers are talking about this because it’s impacting everyone. Novo Nordisk, the company behind both Ozempic and Wegovy, has seen its stock price skyrocket in recent years. In fact, these drugs are so popular that other weight management options have seen a significant decrease, even previously popular options like bariatric surgery. And more are coming – Eli Lilly now has Mounjaro, and other companies are developing their own versions as well. 

What can your company expect?
The specific impacts to any one plan or organization boils down to whether they cover GLP-1s for weight loss purposes. Remember that these drugs can also be used for diabetes, but in much lower doses. 

An analysis of self-funded plans by one of our partners showed that if a 250-person company chooses to cover GLP-1s for weight loss, even assuming a lifetime maximum of $18,000, they can expect to see a total claims increase of 5%. With no restrictions, that increase jumps to 10%. Such an increase can be drastic – up to hundreds of thousands of dollars or more just for these medications.

In a real-world example, consider large health plans like the state of North Carolina. Originally, they considered that the risk of cardiovascular disease associated with obesity resulted in higher costs than covering these medications for weight loss. But now, many of these plans are reversing that course due to the massive cost increases. 

Although weight loss has many health benefits, the costs of these medications today negate those benefits from a cost standpoint. 

A study by the Institute of Clinical and Economic Review showed that in order for these medications to be priced effectively such that the risk of cardiovascular disease was higher than the cost of these weight loss drugs, they would need to be priced annually somewhere between $7,500 and $9,800 per patient per year. But as it stands, GLP-1 medications for weight loss currently go for $12,000 to $18,000 per patient per year.

Strategies for Covering GLP-1s for Weight Loss

GLP-1s are very good for diabetes. But the higher doses required for weight loss (absent a diabetes diagnosis) create more side effects, and at the end of the day, they aren’t cost-effective. As pharmacists and plan advisors, we typically suggest that plans not cover these drugs for weight loss alone. 

Prior Authorization
If a plan will cover GLP-1s for weight loss, a good prior authorization process can help manage costs and utilization. The requirements may include:

• BMI greater than 27 with a co-morbidity or a BMI greater than 30 without
• Mandate that patient participate in a weight loss management program

Ultimately, plans that cover GLP-1s for weight loss want their members to know that the company supports them. But they also hope the members can use the medications as a starting point toward making the lifestyle changes necessary to maintain their weight loss. 

Spending Caps
Another consideration for plans that decide to cover GLP-1s for weight loss is spending caps on this class of drugs. Considering the higher doses necessary for weight loss patients, such a cap can help plans avoid going over budget unexpectedly. Generally, the cap may end after a patient has used the drug for more than a year, which is usually enough time to know that it works.

Ongoing Monitoring and Evaluation

Every plan evaluates its spends each year in order to ensure it can continue to meet its members’ needs and its budget obligations. For GLP-1s specifically, because they tend to have such an outsize impact on prescription spending, it’s a good idea to have a pharmacist assist in evaluating them. 

At HaloScrips, we evaluate GLP-1 spends quarterly. We look at claims; identify and engage the patients who use the medications and the providers who prescribed them; ensure the patients get the most cost-effective option; and monitor them on a regular basis. And that process – which is beneficial to plans, members and the bottom line – is uniquely driven by pharmacists with the knowledge to appropriately evaluate the class of drugs, the patients’ needs, and the costs involved. 

What Next?

Ultimately, payers need to balance the costs and benefits of these drugs for their members. Engaging a pharmacist is a great first step, but here are a few pain points we’ve seen and ways to address them.  

Plan costs increase to unsustainable levels, threatening a plan’s solvency

1. Pain Point: GLP-1 medications, while effective for diabetes and weight loss, drive up health care costs for employers and their self-funded plans. 
2. Real Life Situation: A company sees a significant increase in their pharmacy spends as more employees begin prescriptions for Ozempic, Wegovy, Mounjaro or similar medications, putting pressure on their budgets. 
3. Solution: Implement cost containment strategies like step therapy, prior authorization, and exploring alternative medications to help manage the financial impact of GLP-1s.

Balancing GLP-1 Clinical Benefits with Financial Sustainability

1. Pain Point: Plan sponsors are challenged to provide access to promising new medications while also controlling costs for both the plan and employees.
2. Real-Life Situation: Employees demand coverage for popular GLP-1 medications, but high utilization leads to increased premiums or benefit cuts in other areas.
3. Solution: Payers should consider a comprehensive strategy that includes utilization management, patient education on cost-effective options, and potentially negotiating with manufacturers for better pricing can achieve a balance.

Navigating the GLP-1 Wave: A Strategic Guide for Plan Sponsors

1. Pain Point: There’s a lack of clear guidance on how to best incorporate and manage coverage for new and expensive GLP-1 medications into existing health plans.
2. Real-Life Situation: Uncertainty around formulary placement, prior authorization criteria, and patient assistance programs leads to inconsistent coverage and potential dissatisfaction.
3. Solution: Work with pharmacy benefit experts to develop a customized approach that aligns with the plan’s overall goals, population health needs, and budget considerations.