What Brokers and Employers Need to Know About GLP-1s

GLP-1s (glucagon-like peptide-1 agonists) are a class of medications that help manage blood sugar levels—as well as reduce the risk of cardiovascular disease (like stroke and heart attack), and obesity. 

Brand name GLP-1s like Ozempic®, Trulicity®, and Victoza® (among others) have long been used in the treatment of type 2 diabetes specifically. But recently, GLP-1s have gained mainstream attention and adoption due to their applications for weight loss—originally highlighted as a “side effect.” 

Those findings led to widespread media coverage, and earned ongoing endorsements from celebrities. All of this expanded interest has driven up demand for the drugs, resulting in inventory shortages and increased costs (for example, the list price for some GLP-1s currently sits between $1,000-$1,600 per month).

Already, many plan sponsors spend significant budget on GLP-1s and demand is outpacing supply. About 38 million Americans—that’s 1 in 10 people—have diabetes, and obesity rates are over 40%.

Why Plan Sponsors and Brokers Should Care About GLP-1s 

GLP-1s have been approved to treat diabetes and weight loss, and are showing promise in the treatment of other cardiometabolic diseases. For example GLP-1s are being studied for treatment of other illnesses, like cardiovascular disease, heart failure, liver disorders, and obstructive sleep apnea. As a result, GLP-1s are only likely to grow in popularity.

The increasing demand for GLP-1s has significant cost implications for employer plan sponsors. According to one study, the total per member, per month (PMPM) cost of diabetes has greatly increased, jumping 16% between 2018 and 2022. Employers face the tough decision of either spending millions or increasing premiums, in the event that they want to add GLP-1 coverage to their prescription drug benefits program.

Cost Management, Coverage, and Demand

Skyrocketing costs are one challenge. Another concern is the misconception that anyone can, and will, benefit from GLP-1s. The truth is, GLP-1s are not for everyone—clinical studies have found that just over 10% of patients do not lose weight on semaglutide, while others can’t tolerate certain side effects and have to stop taking the drug.

Length of treatment and patient adherence to taking medication are also important. Diabetes and obesity, for example, are chronic diseases with potential lifelong health consequences. Patients may stop taking GLP-1s prematurely—and in turn, not achieve lasting results. A recent study found that 30% of patients stopped within four weeks, and less than half stayed on the medication for 12 weeks or more. Milliman estimates that a payer with high discontinuation rates may experience a 26% inefficiency in drug spend.

All of these factors make GLP-1s a complex challenge for employers to tackle. The impact of drug coverage isn’t limited to price points and direct patient outcomes: a survey from 9amHealth revealed that 67% of Americans would prefer to stay at a job they don't like as opposed to starting a new job, just to keep insurance coverage for weight loss medications.

Plan sponsors are currently facing critical decisions regarding GLP-1 medications which require balancing costs, member health benefits, and evolving medication landscapes. 

The North Carolina State Health Plan provides a striking example of the financial implications involved, estimating that continuing to cover brand GLP-1s for weight loss in 2024 would require increasing premiums by $48.50 per subscriber per month for all members, not just GLP-1 users. This increase would cover the projected net cost of $170 million ($143 million after rebates) for the 23,000+ plan participants using GLP-1s for weight loss, up from less than 3,000 participants in mid-2021. 

In an attempt to manage these costs, the plan considered tightening prior authorization criteria to limit GLP-1 approval for weight loss to only those with extreme obesity. However, their legacy PBM cautioned that such restrictions might jeopardize their eligibility for rebates, highlighting the complex interplay between cost management and pharmaceutical pricing strategies. 

Ultimately, on January 1st, 2024, the North Carolina State Health Plan made the decision to exclude GLP-1s for weight loss from coverage, while grandfathering in current utilizers. 

Managing Treatment Costs

Managing the costs associated with GLP-1 treatments involves strategic planning and transparent partnerships. It’s key that employers and brokers:

1. Decide if and how your plan will cover GLP-1s, and if so, whether for cardiometabolic diseases (including diabetes), weight loss, or both.
2. Use data to understand the current and forecasted demand for GLP-1s among your members to determine the potential benefits and costs for your plan.
3. Consider clinical review and patient engagement tools, such as prior authorization and custom care plans, to ensure members meet clinical criteria before starting on GLP-1s and members continue treatment for effective, long-term results. 
4. Ask your PBM about the available options for GLP-1s, and how each might affect your specific plan’s costs—particularly when it comes to rebates and copay cards. Be cautious of traditional, legacy PBMs, which may have hidden motives and play a murky “rebate game,” so you’ll want to clarify the details of any related agreements.

GLP-1s represent a powerful tool in managing diabetes and obesity, but they also pose significant cost and management challenges for employers and brokers. By understanding these complexities and working with transparent partners like SmithRx, you can optimize healthcare benefits and manage costs effectively.

SmithRx offers a transparent partnership, constantly evaluating the broader market to find practical, low-cost solutions for managing GLP-1s and other medications. Register today for our series of live webinars on GLP-1s, their role in treating cardiometabolic diseases, and strategies for managing GLP-1 treatments in your healthcare plan.