The Growing Popularity of “Weight Loss” Drugs – And The Impact on Health and Welfare Plans

By now, most people are aware of the new weight loss “wonder drugs” like Ozempic, Wegovy, Rybelsus, and Mounjaro. Through clever marketing and catchy jingles these drugs have made their way from Hollywood to main street U.S.A. And while many are being used off-label, some manufacturers are asking the U.S. Food and Drug Administration to approve them for weight loss treatment.

As demand for these drugs continues to grow, plan sponsors and trustees must examine how, and to what extent, their plans will cover these medications. On the one hand, obesity is a chronic condition that costs the US healthcare system over $170 billion per year. These drugs have the potential to offset some of those costs. However, these drugs can cost over $1,000 a month and need to be taken indefinitely (Ozempic is estimated to cost about $10,000 per year per person).  Additionally, there is lack of historical data on efficacy, especially when the patient does not initiate lifestyle changes (such as regular dieting and exercise). Moreover, these drugs elevate the risk for other serious conditions, such as pancreatitis, pancreatic cancer, and gallbladder issues.

What does this mean for Trustees and Plan Sponsors? Employer plans often follow Medicare and, as of today, Medicare does not cover these drugs. The Pharmaceutical Strategies Group, a pharmaceutical management consulting company, surveyed 180 benefit professionals that represent health plans, employers, and union and found that less than half of the plans cover these medications. However, twenty-eight percent (28%) of those surveyed indicated that they are strongly considering adding these drugs to their current formulary.

Plans that are considering covering these drugs may want to include prior authorization or utilization rules to potentially limit the financial exposure. They could also limit off-label usage to ensure that the drugs are only available for patients with diabetes. Finally, plans could work with their pharmacy benefit manager to obtain manufacturer coupon cards that could lower the cost burden.

Ultimately, the decision to cover these drugs, and to what extent, falls upon the trustees and plan sponsor. Therefore, all plans, including those that want to exclude these drugs, should check with their pharmacy benefit manager to determine whether the drugs are currently covered on the plan’s formulary and if off-label usage is permitted.