Employers Must Brace for 2024 GLP-1 Cost Conundrum

GLP-1s is the buzzword among employee benefits and HR leaders this year. While there’s no doubt these new drugs hold great potential to address the alarming rise of obesity and chronic conditions, the drug price tag of $20,000 a year¹ per person poses a significant financial challenge for employers. In fact, a recent survey² from Business Group on Health found that less than half of employers are covering GLP-1s for obesity and 85% are concerned about the long-term financial implications of these medications and other weight loss drugs. 

The surge in employee demand for GLP-1 medications has presented organizations with an ongoing dilemma of coverage. And this will be exacerbated with the looming arrival of oral GLP-1s³ that will likely create even more demand. 

‍Oral GLP-1s For Obesity: A Game Changer Or Cost Driver?

‍Broadly speaking, oral medications are more manageable for patients compared to injectables. A pill is generally less intimidating, more convenient and easier to administer. A recent Kaiser Family Foundation poll⁴ found that 45% of consumers are interested in taking safe, effective prescription drugs for weight loss. This number drops to 23% when asked how they would feel if they had to administer the drug to themselves as a weekly injection.

While the cost of GLP-1s in pill form is still uncertain, the anticipated ease of use is expected to result in a significant increase in both demand and utilization. This will only add to employer’s cost challenges.  

Implications for 2024 Employee Benefits Strategies and Beyond‍

When it comes to GLP-1 medications, employers need to consider strategies to balance addressing the health of their employees with type 2 diabetes and obesity while remaining mindful of the costs of these medications. 

GLP-1s have been proven to be highly effective for people managing diabetes. The current annual expenditure by employers stands at $245 billion⁵ on direct and indirect costs related to type-2 diabetes. GLP-1s have the potential to alleviate some of this burden. Nearly all employers today cover GLP-1 for diabetes indications⁶. While only 20% of people with type-2 diabetes take GLP-1s, this number is projected to rise in the future.    

Cost implications will only rise as coverage expands to include the 42% of Americans⁷ who are considered obese and could also benefit from GLP-1s. The recent FDA approval of Zepbound (tirzepatide), alongside Wegovy (semaglutide), expands the array of options now available on the market for weight loss. 

Digital Can Help

One strategy is to offer a comprehensive holistic digital health solution that offers lifestyle coaching for all employees whether they’re looking to lose weight, maintain their current weight, or sustain weight loss. 

If and when organizations decide to cover GLP-1s for weight loss, employer-provided programs must ensure employees taking GLP-1s have the right foundation in place. This includes support for medication adherence and side-effect management and coaching on lifestyle modification such as nutrition, exercise, sleep, etc⁸. With this continuity of care, employees are more likely to see sustained success before, during and after their treatment plan. Additionally, solutions that incorporate clinician-guided support can help stratify and triage members to the appropriate treatment plan, ensuring employees are prescribed these medications only when deemed appropriate and necessary. 

Want to learn more about how Lark Health partners with employers to develop a weight management strategy that balances clinical outcomes and cost-effectiveness? Learn more.
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¹https://www.jwatch.org/na54359/2021/12/27/another-glp-1-receptor-agonist-weight-management

²https://www.businessgrouphealth.org/en/resources/2024-large-employer-health-care-strategy-survey-executive-summary

³https://www.fiercepharma.com/pharma/eli-lillys-tirzepatide-passes-2nd-obesity-weight-loss-trial-gunning-fda-nod-2023

⁴https://www.kff.org/health-costs/poll-finding/kff-health-tracking-poll-july-2023-the-publics-views-of-new-prescription-weight-loss-drugs-and-prescription-drug-costs/#:~:text=Nearly%20half%20of%20adults%20(45%25)%20say%20they%20would%20be,interested%20in%20taking%20a%20prescription

⁵https://nomihealth.com/press/diabetes-diagnosis-rates-rise/

⁶https://www.businessgrouphealth.org/en/resources/2024-large-employer-health-care-strategy-survey-executive-summary

⁷https://www.axios.com/2023/03/23/norc-share-americans-obesity

⁸https://diet.mayoclinic.org/us/blog/2023/considering-glp-1-medications-what-they-are-and-why-lifestyle-change-is-key-to-sustained-weight-loss/