GLP-1 receptor agonists are all the rage these days for the promise of easy weight loss. GLP1s are FDA-approved for managing Type 2 diabetes but physicians are prescribing the medication for off-label use to help their patients lose weight. Between 2020 and 2023, the use of GLP-1 medications such as Ozempic and Wegovy, increased sharply due to off-label prescriptions. While these medications are very effective, they are also very expensive, which is challenging insurers, employers, and patients alike. As the demand for GLP-1 drugs continues to grow, particularly for weight loss, understanding the complexities of coverage and finding cost-saving strategies has become a top priority.
GLP-1 Medications: A Growing Financial Burden
High demand coupled with a steep price tag means pharmacy budgets are getting pushed to the brink. An analysis by KFF indicated that as many as 42% of U.S. adults under 65 with private insurance may be eligible for GLP-1 drugs, a reflection of how widely they are now being considered for both diabetes and obesity management. The following are the average retail costs of two popular GLP-1 drugs:
- Ozempic: Average retail price is $900 to $1,200 per month.
- Wegovy: Average retail cost is approximately $1,300 to $1,500 per month.
Copays can range from $25 to $200+ depending on the patient’s plan and coverage specifics. The insurer pays the difference of the retail cost and copay, but coverage by insurance plans is a major issue, with many insurers only covering GLP-1s for diabetes, not for weight loss.
According to a study published in JAMA Health Forum, 61% of Ozempic prescriptions in 2023 were for patients with commercial health insurance, accounting for the vast majority of semaglutide prescriptions, raising concerns about how covering these drugs might impact premiums. Self-funded employers are feeling the pressure too. Coverage trends vary, but recent reports show that approximately 34% of large employers are offering coverage of GLP1s for weight loss.
The Off-Label Use Dilemma
A report from Bloomberg noted that sales of GLP-1 drugs more than doubled from 2020 to 2022, largely driven by increased off-label prescriptions for weight loss. Although highly effective for managing Type 2 diabetes, GLP-1 medications like Ozempic are not FDA-approved solely for weight loss. Yet, many physicians continue to prescribe them off-label to help patients shed pounds. This practice has raised ethical and financial concerns. The off-label use of these drugs for weight loss is placing intense strain on pharmacy budgets.
Employers and insurers are caught in a bind—cover the drugs for weight loss, potentially driving up premiums, or exclude coverage and face pushback from employees and members who deeply desire effective weight management. An August 2023 survey from KFF revealed that 80% of adults believe insurers should cover weight loss drugs for those diagnosed as overweight or obese but few actually do.
HealthTech Can Lower GLP-1 Costs
As health plans and employers grapple with these rising costs, they are turning to unpopular solutions like prior authorization (PA) to control pharmacy budgets. Through PA, insurers can limit off-label use of GLP1s by denying coverage for non-approved reasons. Further, they can encourage physicians to consider cheaper alternatives for weight loss.
The drawback is that diabetes patients who need GLP-1 drugs for their FDA-approved use can experience delays in critical treatment options. If the PA process takes days or even weeks, patient’s blood sugar control will be negatively impacted, with potential long-term harms.
Another reason PA is so unpopular is due to the administrative burden of going through the process. Providers may need to submit extensive documentation to prove that the medication is necessary for diabetes management, time that is not billable.
In contrast, solutions like those offered by RazorMetrics, can help ease the burden off physicians and patients. RazorMetrics uses advanced data analytics to give physicians more transparency of GLP-1 prescriptions, minimize unnecessary off-label use, and reduce the paperwork.
As the demand for GLP-1 drugs continues to rise, the pressure on health plans and employers to find sustainable coverage solutions will only grow. By providing key insights to physicians, RazorMetrics reduces unnecessary prescriptions of high-cost drugs and helps control pharmacy spend while ensuring that these popular medications remain accessible without causing friction in the process.
