GLP-1 Drug Impact on Employee Health Plans

This video provides an in-depth exploration of the escalating financial impact of GLP-1 medications on employer health plans. Dr. Eric Bricker begins by identifying the key GLP-1 drugs, Ozempic and Mounjaro for diabetes (also causing weight loss), and Wegovy and Zepbound specifically for obesity, noting their respective manufacturers, Novo Nordisk and Eli Lilly. He establishes the context by highlighting the rapid increase in employer spend on these medications, which jumped from 7% to 9% of total prescription spend between 2022 and 2023, contributing to a significant overall rise in prescription costs to 27% of total healthcare spend.

The presentation then delves into the alarming potential for future cost escalation. Despite the high prevalence of diabetes (12% of adults) and obesity (42% of adults) in the US, only a mere 1.7% of plan members are currently on GLP-1 medications. Dr. Bricker calculates that if GLP-1s were prescribed to all eligible individuals, employers could face a staggering 25-fold increase in their GLP-1 spend, potentially pushing the total plan spend attributable to these drugs to 68%. Each GLP-1 medication costs employers approximately $9,000 to $10,000 per person per year after PBM discounts and rebates, making them two of the top four medications by total employer spend.

Dr. Bricker outlines various strategies employers are implementing to mitigate these rising costs. These include prior authorization requirements, such as mandating lab-confirmed diabetes for Ozempic/Mounjaro or specific BMI thresholds for Wegovy/Zepbound. He reveals a critical challenge: pharmaceutical manufacturers are refusing to pay rebates if employers impose BMI requirements, effectively increasing the net cost. Other strategies involve step therapy, requiring patients to try alternative treatments first, and increased cost-sharing, including lifetime maximum benefits for GLP-1 coverage. Some employers, particularly small to medium-sized companies, are resorting to non-coverage for obesity-related GLP-1 use. The speaker concludes by using the "tragedy of the commons" analogy to suggest that the extreme financial burden of GLP-1s might eventually compel employers to advocate for a single-payer healthcare system in the United States.

Key Takeaways:

• Rapidly Escalating Pharmaceutical Spend: GLP-1 medications (Ozempic, Mounjaro, Wegovy, Zepbound) are a significant and growing component of employer prescription drug spend, rising from 7% to 9% of total RX spend in just one year (2022-2023). This contributes to prescriptions now accounting for 27% of overall healthcare plan costs.
• Massive Future Cost Potential: Despite 12% of adults having diabetes and 42% having obesity, only 1.7% of plan members are currently on GLP-1s. This indicates a potential 25x increase in GLP-1 spending if all eligible individuals were treated, which could lead to GLP-1s consuming up to 68% of an employer's total health plan budget.
• High Per-Person Cost: After PBM discounts and rebates, GLP-1 medications cost employers approximately $9,000 to $10,000 per person per year, making them two of the top four most expensive medications for employers.
• Manufacturer Influence on Rebates: Pharmaceutical companies (Novo Nordisk, Eli Lilly) are actively influencing employer coverage policies by threatening to withhold rebate money if employers implement specific BMI requirements for GLP-1 coverage for obesity, thereby increasing the net cost for employers.
• Employer Cost-Containment Strategies: Employers are adopting various strategies, including prior authorization (e.g., requiring lab-confirmed diabetes or specific BMI thresholds), step therapy (requiring trials of alternative treatments), increased cost-sharing, and even lifetime maximum benefits for GLP-1 coverage.
• Non-Coverage as an Option: A significant portion of employers, especially smaller and medium-sized companies, are opting not to cover GLP-1 medications for obesity, though most still cover them for diabetes.
• Patient Adherence and Efficacy: GLP-1 medications are appetite suppressants and require patients to maintain a 500-calorie daily deficit and at least 30 minutes of exercise per day to be effective for weight loss, as demonstrated in clinical studies.
• High Drop-Off Rates: A substantial number of patients (49-59%) discontinue GLP-1 medications within a year, often due to side effects or lack of perceived efficacy, which impacts the long-term cost-effectiveness for plans.
• Gender Disparity in Usage: Approximately 82% of GLP-1 patients are female, suggesting a potential for increased male usage in the future, further contributing to cost escalation.
• Potential for Systemic Healthcare Shift: The extreme financial burden posed by GLP-1 medications might push employers to a tipping point where they advocate for a single-payer healthcare system, viewing it as the only viable solution to manage unsustainable healthcare costs.

Key Concepts:

• GLP-1 Medications: Glucagon-like peptide-1 receptor agonists, a class of drugs used to treat Type 2 Diabetes and obesity (e.g., Ozempic, Mounjaro, Wegovy, Zepbound).
• Prior Authorization: A process requiring healthcare providers to obtain approval from a health plan before a specific medication or service is covered.
• Step Therapy: A type of prior authorization that requires patients to try less expensive or first-line treatments before progressing to more costly or specialized medications.
• PBM Discounts and Rebates: Price reductions negotiated by Pharmacy Benefit Managers (PBMs) with pharmaceutical manufacturers, which can significantly lower the net cost of drugs for health plans.
• Tragedy of the Commons: An economic theory where individual users acting independently according to their own self-interest behave contrary to the common good of all users by depleting or spoiling that resource through their collective action. In this context, the health plan budget is the "commons."
• Single-Payer Healthcare System: A system where a single public or quasi-public agency organizes healthcare financing, but the delivery of care remains largely in private hands.
• BMI (Body Mass Index): A measure used to classify obesity and overweight in adults, often used as a criterion for GLP-1 coverage.
• Hemoglobin A1c: A blood test that measures average blood sugar levels over the past 2-3 months, used to diagnose and monitor diabetes.

Examples/Case Studies:

• Specific Medications: Ozempic, Mounjaro (diabetes/weight loss); Wegovy, Zepbound (obesity).
• Manufacturers: Novo Nordisk (Ozempic, Wegovy); Eli Lilly (Mounjaro, Zepbound).
• Cost Data: GLP-1s account for 9% of total RX spend; RX spend is 27% of total healthcare spend; $9,000-$10,000 per person per year after PBM discounts/rebates.
• Utilization Data: 1.7% of plan members on GLP-1s; 12% of US adults have diabetes; 42% of US adults are obese; 82% of GLP-1 patients are female; 41-51% drop off within a year.