As a small or mid-sized business leader, you’re no stranger to managing costs and making tough decisions for the long-term success of your company. In the last couple of years, one growing pressure on your company’s bottom line may be the rising use of GLP-1 medications like Ozempic and Wegovy.
In the first half of 2024, two of the five most expensive drugs in Roundstone’s book of business were GLP-1 medications.
So why does this matter to you, and what can you do about it?
Here’s the deal: The popularity of these medications is skyrocketing, and that comes with significant costs for employers and employees alike. But understanding the situation and adopting the right strategies can help you control these costs while still offering valuable benefits to your employees.
GLP-1 Medications: How We Got Here
GLP-1 drugs aren’t new. The FDA approved the first GLP-1 receptor agonist drug for type 2 diabetes back in 2005. These medications mimic a natural hormone in the body that helps manage blood sugar, making GLP-1s a popular treatment for diabetes. In fact, four in ten American adults with diabetes have used GLP-1s.
In 2021 the FDA approved Wegovy, a GLP-1 medication for weight loss. Since then, two more GLP-1 drugs have been approved for weight management. The buzz surrounding these drugs has exploded, thanks in part to social media.
Usage has risen dramatically—especially among people without diabetes. Between 2019 and 2023, GLP-1 use among Americans without diabetes increased by 700 percent.1
The Growing Costs for Employers
Here’s where it hits your bottom line: GLP-1 medications are expensive. A one-month supply can range from $500 to $1,300 per person.2 While this price tag is not as hefty as some high-cost specialty drugs, the volume of employees using these drugs makes the cost add up fast.
Sixty-one percent of those who’ve ever used GLP-1s did to treat a chronic condition like diabetes or heart disease in addition to weight loss, or weight loss alone.3
If you’re a cost-conscious employer, the rising cost of these medications may force you to shift more costs to your employees or find other areas to cut back.
But don’t panic . If you’re a self-funded employer, you have more options than those stuck in fully insured plans. Self-funding allows you to build a more customized plan that helps you manage the financial impact of GLP-1 medications.
You don’t need to be a pharmacy expert, but you do need to work with knowledgeable partners who can guide you in finding the right solutions.
Strategies to Control GLP-1 Costs
So, what can you do? It’s all about making informed decisions and working with the right partners.
Here are some strategies to consider.
1. Partner with an Aligned Pharmacy Benefit Manager (PBM)
Your PBM is key in managing drug costs and ensuring appropriate utilization of high-cost drugs like GLP-1s. Make sure your PBM passes through 100 percent of manufacturer rebates to your plan.
When a PBM holds onto rebates, it creates a conflict of interest—they make money from pushing more expensive drugs instead of helping you control costs.
2. Consider the Costs and Benefits of Covering GLP-1 Medications
GLP-1 drugs are expensive, but they can provide long-term benefits for employees with type 2 diabetes and obesity, such as reducing the risk of cardiovascular disease and kidney issues.
However, the savings from these potential health improvements are long-term and highly dependent on lifestyle changes. To offset the short-term costs, ensure your plan has utilization management strategies in place.
3. Design Your Plan to Ensure Optimal Utilization
If you choose to cover GLP-1 medications, work with your PBM to implement strategies like prior authorization and step therapy.
- Prior authorization makes sure that members meet specific criteria before their prescriptions are filled.
- Step therapy requires members to try more cost-effective medications first before moving on to brand-name drugs.
4. Take a Holistic Approach to Diabetes and Obesity
Effective chronic condition management goes beyond just covering medications. Waive member cost-sharing for preventive care and consider digital health solutions that provide ongoing support for managing diabetes and obesity.
For example, partnering with a digital health provider can help members stay on top of their health and reduce long-term costs.
The Path Forward
There’s no one-size-fits-all solution, but with the right approach, you can control the costs of GLP-1 medications and still provide valuable healthcare benefits to your employees.
Self-funded employers have the flexibility to get creative with their healthcare plans, and with partners like Roundstone, you can make decisions that are in the best interest of both your business and your workforce.
GLP-1 drugs present a serious challenge, but as any smart business owner knows, challenges often lead to opportunities. By partnering with aligned PBMs and benefits advisors, you can navigate this issue and build a healthier, more sustainable plan for your employees—without sacrificing your bottom line.
The key is to take control of the situation now. GLP-1 costs aren’t going anywhere, but with the right strategy, neither are your profits.
Contact us today to learn how your company can save money by switching to self-funding with Roundstone.
References
1 Mahase, E. (2024). GLP-1 agonists: US sees 700% increase over four years in number of patients without diabetes starting treatment. BMJ. doi:10.1136/bmj.q1645
2 GLP-1s: 8 things hospital leaders should know, Becker’s Hospital Review. https://www.beckershospitalreview.com/glp-1s/glp-1s-8-things-hospital-leaders-should-know.html
3 Kaiser Family Foundation Health Tracking Poll (April 23 – May 1, 2024).
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