GLP-1 drugs like Ozempic and Wegovy can help people lose weight but come with a steep price tag that makes employers reluctant to cover their cost.
A survey from the International Foundation of Employee Benefit Plans found that 22 percent of employers currently cover weight loss medications for their employees.
Julie Stich, vice president of content at the International Foundation, told Becker's 2022 was the first year the association has surveyed employers about weight loss drugs specifically. The FDA's approval of Wegovy for weight loss in 2021, and off-label use of drugs like Ozempic approved to treat Type 2 diabetes, have put the medications on the radar for both employees and employers.
"Employees are going and asking their employers to possibly cover it," Ms. Stich said.
The price of the drugs is a big consideration for employers — GLP-1 drugs can cost more than $10,000 a year without insurance.
Employers are also considering the short-term costs of the drugs versus their long-term potential savings. Weight loss drugs could reduce costs down the line if they improve an employee's underlying health conditions like hypertension or diabetes, Ms. Stich said.
The International Foundation of Employee Benefit Plans survey interviewed 502 employers between May and August 2022. A survey of 149 employers and health plans by the Pharmaceutical Strategies Group, fielded in February and March, found 43 percent of employers covered FDA-approved weight loss drugs, and 28 percent were considering adding the drugs in the next few years.
Ms. Stich said more evidence on the long-term outcomes of the drugs could entice more employers to cover their costs.
"They're still pretty new. If employers can see that they do work long term, maybe the price will come down a little bit — all of that employers will keep taking a look at as they move forward," she said.
Private payers have been reluctant to cover the drugs for weight loss only. Medicare is currently barred from covering any weight loss drugs, though FDA Commissioner Robert Califf, MD, said in June that the agency and CMS are discussing how to handle the drugs in Medicare.
Employers have not embraced coverage of the drugs, Cigna Group CEO David Cordani said in an April call with investors.
"Employers have had a more limited appetite to expand coverage beyond clinical diagnoses such as diabetes for certain lifestyle treatment," Mr. Cordani said. "There has been some, but we've seen more limited adoption of that thus far."
In a competitive labor market, weight loss drug coverage could be an attractive benefit for employees, Ms. Stich said.
"They're looking at providing this as an attraction or retention device, especially in the labor market that we're facing right now. Employees are asking for this — if they provide that, will that make them an employer of choice that employees will want to start working for or stay working for," Ms. Stich said.