Employers Consider Covering Weight-Loss Drugs

8-minute read

If tech head-billionaire Elon Musk and comedienne Amy Schumer are doing it, then why can’t they, too?

That, increasingly, is the question American workers are asking themselves about those diabetes drugs that some celebrities and others are using to shed unwanted pounds – and never mind that they can cost more than $1,000 per month.

And now they want their employers to help cover the costs. It’s a question some employers are considering, if only to retain an edge in a competitive labor market. Other employers have already decided the cost is too high, cutting off insurance coverage.

Weight-loss drugs can be expensive, but employers are considering covering them in their medical plans for obese employees.

All of this is happening, keep in mind, while some of these medications haven’t been approved for weight-loss use by the Food and Drug Administration.

Obesity, as has been widely reported for years, is a growing problem, now impacting more than four in 10 American adults, according to the Centers for Disease Control and Prevention (CDC).

It’s also an expensive problem.

According to the CDC, in 2019, medical costs for obese adults were, on average, $1,861 higher than for adults at a healthy weight. The annual medical cost of obesity in the United States was $173 billion in 2019.

After years of paying for gym memberships and offering wellness programs, it’s no wonder at least some employers are searching for new approaches to help employees lose weight and, along the way, potentially fend off Type 2 diabetes and high blood pressure.

Popular Weight Loss Drugs

The drugs getting all of the attention at the moment are known as glucagon-like peptide 1 (GLP-1) receptor agonists. These drugs work by lowering an individual’s blood sugar levels. While GLP-1 drugs have not been extensively tested on individuals with obesity, they have the side effect of sending fullness signals to the brain, which produces an anti-appetite effect leading to weight loss.

Whether off-label or not, these drugs are helping people lose as much as 15% of their body weight; this may help treat and address several weight-related conditions, including heart conditions, diabetes, and musculoskeletal issues.

However, individuals may need to take these drugs indefinitely to maintain any weight loss benefits. Side effects include nausea, vomiting and diarrhea.

While two of these drugs - Ozempic and Mounjaro - are currently only approved to treat diabetes, a third, Wegovy, was approved by the FDA in 2021 to treat chronic weight management in addition to diabetes.

Also, pharmaceutical giant Eli Lilly is seeking FDA approval to use Mounjaro to treat obesity.

While most private health insurance doesn’t cover these obesity drugs, nearly 130 million adults would be eligible for GLP-1s because of their weight and other health conditions, according to Bloomberg.

Only 10 state Medicaid programs currently provide coverage for obesity drugs, with eight additional states considering changes to cover these drugs. Medicare does not cover weight-loss drugs.

Considerations for Weight Loss Drugs

Data from the International Foundation of Employee Benefits Plans shows that only 22% of employers now cover prescription weight-loss drugs, although the percentage is higher for employers with 5,000 or more employees.

While there’s concern about these drugs’ costs, increased demand from workers has prompted employers to reconsider their obesity care benefits, including potentially offering weight-loss drugs.

A recent survey from Ro and the Obesity Action Coalition revealed that 44% of workers would change jobs to obtain coverage for obesity treatment. In other words, while these weight-loss drugs may be expensive, covering at least some of their cost could help strengthen employers’ ability to attract and retain workers.

What Should Employers Do?

Employers deciding whether to cover weight-loss drugs will want to consider several factors:

Expense. Prescription drugs typically drive a large percentage of an organization’s health care spending. Deciding to cover weight-loss drugs could well result in employers seeing significant spikes in their health care costs, especially if multiple employees receive the drugs to lose or manage their weight. For some employers, these costs may prove too difficult to absorb.

Drug Design. GLP-1 drugs were not originally designed to treat weight loss. In situations where individuals use them for this purpose, the drugs may not be effective if used for a short period of time. Therefore, employers who cover these medications to treat weight loss may be required to make a sustained commitment for employees to experience weight loss benefits. That, of course, will mean higher costs. Employers may also want to consider these drugs’ possible side effects and the fact that they are relatively new.

Health Plan Coverage. Because most GLP-1 drugs aren’t FDA approved for weight loss, most insurers will not cover them when used for that purpose. Most health care professionals will not prescribe these drugs for weight loss unless an individual is obese — meaning a BMI of 30 or more — and has had difficulty losing weight using traditional methods. Some health care providers may prescribe GLP-1 drugs to individuals with obesity if they also have weight-related health conditions, such as high blood pressure.

Prerequisites, Limits and Alternatives. As more employees ask their employers to cover these drugs, some organizations are requiring employees to participate in lifestyle modification programs as a prerequisite for coverage, while others are asking employees to participate voluntarily. According to a recent survey of over 150 employers by pharmacy benefit consulting company Pharmaceutical Strategies Group, 22% of employers who cover FDA-approved weight-loss drugs require employees to participate in a lifestyle modification program in order to be eligible for the drugs. For another 20% of employers, participation in such programs is voluntary. Additionally, some employers are placing limits on coverage of weight-loss medications in terms of either dollars or duration of treatment.

Many employers still consider weight loss a lifestyle problem rather than a health issue. As a result, they don’t believe weight-loss drugs are medically necessary. However, as employee attitudes and demands shift, the wait-and-see approach may ultimately prove to be impractical.

The Mahoney Group, based in Mesa, Ariz., is one of the largest independent insurance and employee benefits brokerages in the U.S. An employee-owned organization, we’ve been providing our clients with the confidence to face whatever lies ahead for more than 100 years. For more information, contact us online or call 877-440-3304.

This article is not intended to be exhaustive, nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice.

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