GLP-1 Drugs: A Double-Edged Sword for Employers
Drugs like Wegovy and Ozempic, part of the GLP-1 class of medications, have gained significant attention for their effectiveness in aiding weight loss. However, a recent study shared with Reuters highlights a critical concern for employers: these drugs may not reduce overall medical costs, at least in the short term. The findings reveal a 46% increase in medical expenses over two years for patients using GLP-1 drugs for obesity treatment, compared to a 14% rise in costs for a control group not using these medications.
Key Findings from the Study
The study, conducted by pharmacy benefits manager Prime Therapeutics, analyzed the medical and pharmacy claims of 3,046 patients with commercial health plans. These individuals, diagnosed with obesity or a body mass index (BMI) of 30 or higher, began using GLP-1 drugs between January and December 2021. Key findings include:
- The average annual medical cost for patients using GLP-1 drugs rose to $18,507, up from $12,695 before starting the medication.
- Prescription drug costs were the primary driver of this increase, but other medical expenses also climbed.
- No significant reduction in obesity-related medical events, such as heart attacks, strokes, or type 2 diabetes diagnoses, was observed.
- Only one in four patients continued using the medication after two years.
These findings raise questions about the cost-effectiveness of GLP-1 drugs, especially for employers and insurers considering coverage for these treatments.
Employers’ Concerns and Strategies
Employers and government health officials are hesitant to cover GLP-1 drugs due to their high upfront costs and uncertain long-term savings. Ben Ippolito, an economist at the American Enterprise Institute, noted, “The budget hit here is frightening for a lot of governments and private entities.”
Some employers are adopting strategies to manage these costs, such as:
- Requiring prior authorization for GLP-1 prescriptions.
- Tying coverage to participation in lifestyle modification programs.
- Implementing value-based tactics, such as reducing employee costs for chronic condition treatments.
These approaches aim to balance the benefits of GLP-1 drugs with their financial implications.
Pharmaceutical Industry’s Perspective
Pharmaceutical companies like Novo Nordisk and Eli Lilly, which manufacture GLP-1 drugs, argue that these medications offer long-term societal benefits by addressing health issues linked to obesity. Novo Nordisk stated, “We know treatment of obesity is linked to better medical outcomes, even if bureaucrats haven’t figured out how to account for these savings.”
Despite these claims, the study’s findings suggest that the short-term financial burden remains a significant barrier to widespread adoption.
Future Implications and Research
Experts believe that more extended studies are needed to fully understand the cost-benefit dynamics of GLP-1 drugs. David Lassen, Vice President for Pharmacy Clinical Services at Prime Therapeutics, emphasized the need for three years of data to gauge the long-term impact. “If we determine there is not a positive outcome with our data and there is not a return on investment, that will be an inflection point ahead that we will have to consider,” Lassen said.
Additionally, researchers like Valerie Smith from Duke University suggest that potential savings may be more evident among specific patient groups, such as those with severe obesity or multiple chronic conditions.
While GLP-1 drugs like Wegovy and Ozempic offer promising results for weight loss, their financial impact on employers and insurers remains a contentious issue. As the market for weight-loss drugs continues to grow, reaching an estimated $150 billion annually in the next decade, stakeholders must carefully weigh the benefits against the costs. Combining these medications with lifestyle programs and value-based strategies may offer a more sustainable path forward.
Source: Reuters, Prime Therapeutics, Gallagher’s 2024 US Physical & Emotional Wellbeing Report