As GLP-1 medications such as Ozempic and Wegovy gain popularity for treating obesity and related conditions, employers are experiencing escalating healthcare costs. In 2024, on average, these drugs accounted for 10.5% of total insurance claims, up from 8.9% in 2023.While these treatments offer significant health benefits, their high costs present challenges for employee benefits programs. Employers must balance managing expenses and maintaining access to essential medications.
Let’s look at strategies to address GLP-1 drug costs without compromising employee access in your benefits plan.
Comprehending the Rise in GLP-1 Drug Utilization
GLP-1 medications have rapidly grown in demand because of their proven success in supporting weight management and treating metabolic disorders. As more employees seek these treatments, employers see a notable impact on healthcare costs and overall benefits plan utilization.
What are GLP-1 Drugs? Why Are They in High Demand?
GLP-1 medications, including well-known treatments like Ozempic and Wegovy, are injectable drugs designed to help manage type 2 diabetes and support weight loss. Their effectiveness in controlling blood sugar and promoting weight reduction has driven strong demand. Expanding FDA approvals, media attention, and growing public awareness have increased prescriptions, significantly influencing employer-sponsored health plan costs.
Why GLP-1s Present a Cost Challenge for Employer Health Plans
GLP-1 medications are among the most expensive treatments on the market, costing an average of$8,000 to $10,000 per user, per year. As utilization rises, employer health plans have higher claim expenses, increased premiums, and budget strain. Balancing access to these clinically valuable drugs while controlling plan costs has become a pressing challenge for benefits managers.
The Risk of Simply Dropping Coverage
Eliminating GLP-1 coverage might seem like a quick way to control costs, but it can have significant consequences. Employees may lose access to effective treatments, leading to poorer health outcomes and decreased satisfaction with their benefits. Employers risk higher long-term medical expenses and potential retention challenges when coverage is abruptly restricted.
The Long-Term Health Impact of Obesity Management
Obesity management is essential for preventing chronic conditions such as type 2 diabetes, heart disease, and joint complications. Limiting access to GLP-1 medications can disrupt effective weight management, potentially leading to worsening health outcomes over time.
Employees who cannot maintain treatment may have higher medical costs and reduced productivity. For employers, supporting sustainable obesity management through continued coverage helps protect both employee well-being and long-term healthcare expenditures.
Potential Disruption to Employee Satisfaction and Engagement
Removing GLP-1 coverage can negatively impact employee morale and trust in their benefits plan. Access to effective treatments is a top factor in overall satisfaction, and sudden restrictions may lead to frustration or disengagement.
Employees may feel their health needs are undervalued, affecting retention and productivity. Maintaining coverage signals that the organization prioritizes well-being, helping generate loyalty and sustained engagement across the workforce.
Cost Control Strategies Without Eliminating Coverage
Employers don’t have to sacrifice access to GLP-1 medications to manage costs. Plans can balance affordability with effective care by implementing targeted strategies, such as formulary management, utilization reviews, and negotiated pricing. These approaches help control spending while securing that employees receive clinically valuable treatments, supporting health outcomes and overall satisfaction with their benefits.
Prioritizing Clinical Guidelines and Utilization Management
Employers can manage GLP-1 costs by emphasizing responsible prescribing that is aligned with clinical guidelines. Implementing prior authorization confirms that medications are used appropriately, while step therapy encourages starting with lower-cost alternatives when suitable.
Establishing clear eligibility criteria, such as BMI thresholds or diagnosis requirements, helps target treatment to employees who will benefit most. These utilization management strategies balance cost control with continued access to effective therapies, promoting fiscal responsibility and employee health.
Implementing Tiered Coverage or Shared Cost Transparency
Introducing tiered coverage or alternative cost-sharing models allows employers to manage GLP-1 expenses without restricting access. Plans can promote cost-conscious choices by assigning different co-pays based on medication type or encouraging generic alternatives.
Transparent communication about these structures helps employees understand their financial responsibility while making sure that eligible members maintain access to essential treatments, supporting affordability and continuity of care.
Partnering With the Right PBM for Cost Transparency
Collaborating with a Pharmacy Benefit Manager (PBM) that offers clear cost visibility, rebate opportunities, and specialty pharmacy support can help employers manage GLP-1 expenses effectively.
The right PBM provides actionable insights into utilization patterns, identifies savings opportunities, and establishes that employees have access to necessary medications. This enables plans to control costs while maintaining high-quality care and overall satisfaction with benefits.
Balancing Affordability and Access in 2026 and Beyond
Effectively managing GLP-1 costs requires strategies that maintain access while controlling spending. By combining utilization management, tiered coverage, and strong PBM partnerships, employers can protect employee health and plan sustainability. Reach out to our professionals at New City Insurance today to optimize your benefits strategy and support your workforce in 2026 and the future.