Why Many Companies Are Reconsidering Coverage for GLP-1 Drugs

As GLP-1 use has exploded in the U.S., many companies have started discontinuing coverage of these treatments in the health plans they maintain for their employees. This is a trend worth watching, and it warrants a deeper look to understand why it is happening.

First off, GLP-1 drugs are medicines like Wegovy and Zepbound that were designed to help in the treatment of type 2 diabetes. Many of these drugs were eventually also approved by the U.S. FDA for use in weight loss, and their use exploded.

You would imagine that if these medications are being used by more and more people, then employers would be very eager to keep them in the health coverage provided to employees. However, the reverse is happening, and the pace at which employers are dropping GLP-1s from their coverage plans is accelerating. Why could this be happening?

The first reason is cost. These medications can cost a thousand dollars or more for a month’s supply, and you can start to see the picture of how these bills can quickly add up as employers assess the total cost of providing coverage for these drugs.

Cost isn’t an issue because employers are “greedy” and don’t want to spend more on their employees. The reality is that the majority of businesses in America are small businesses, and stacking such a costly medical expense on their budgets can have a serious impact on their bottom lines. Many can’t survive such a cost, so they end up excluding it from the coverage they provide.

The second major reason is framing. GLP-1s have exploded in popularity because many are approved for use as weight loss treatments. Lots of people are struggling with excess weight and so the popularity of these drugs has skyrocketed. This isn’t necessarily bad, but it has had an unintended consequence of reshaping how these drugs are viewed.

Many now look at them as costly treatments for a cosmetic issue, and you can forgive employees who start wondering why they should foot the bill for someone who “simply wants to drop a size or two.” It is no wonder that coverage is being withdrawn.

This is unfortunate, because GLP-1s provide cardiovascular and numerous other health benefits, and by withdrawing coverage, those other health risks that the drugs help with could end up taking a bigger toll and straining the health insurance plans of the very employers who stopped providing GLP-1 coverage.

This reality is captured by firms like Bank of America that have continued to cover GLP-1s for their employees because they see such coverage as an investment in their workforce. A healthier employee is more productive, and entities that provide extensive health insurance coverage are attractive workplaces for top talent. Long term, medications like GLP-1s could even potentially lower the overall cost of providing health coverage if they improve several health markers in their users.

As you can see, the matter of GLP-1s is nuanced and people’s views, especially those of employers, could be influenced by one of several factors that make them see covering these medications as a necessary expense or one they can back out of.

It would be interesting to hear what conversations around this subject executives at entities like Astiva Health have had with the people they serve.

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