No one knows for sure what the next several years are going to bring for the health care industry, but at the moment, health care spending is expected to increase at least eight percent in 2025, the highest growth in more than a decade.
One of the core reasons is a massive influx in patients utilizing glucagon-like peptide (GLP-1) drugs for the treatment of diabetes and obesity. According to KFF, the annual cost of these drugs in the U.S., upwards of $11,000 at recent list prices, has raised concerns about the fiscal impact of broad coverage of GLP-1 drugs on Medicare, other health insurers, and patients. Case in point: In 2018, total gross Medicare spending on GLP-1 brands, Mounjaro, Ozempic and Rybelsus, was $57 million. As of 2022. spending had risen to $5.7 billion – an amount that is already overwhelming employers.
And while the popularity of these drugs for treatment of diabetes and obesity is well-known, did you know that they are being studied for new indications? It's clear GLP-1 medications are not a short-term trend, but, instead, are becoming a permanent and growing solution in health care. Brokers and their clients need to be prepared for this shift.
Health care spending is expected to increase at least eight percent in 2025, the highest growth in more than a decade. ”
Exploring new uses for a standard drug
In 2005, the first GLP-1 was approved by the U.S. Food and Drug Administration (FDA) to treat diabetes. But researchers are quickly discovering additional indications for GLP-1s – everything from osteoarthritis to Alzheimer’s disease.
The FDA recently approved a new indication for use for Wegovy (semaglutide) injection to reduce the risk of heart attack, cardiovascular death and stroke. From Parkinson’s and kidney disease to chemical dependency and sleep apnea, researchers are finding promise in the GLP-1 drugs treating a wide array of conditions. While medically promising, this can make it a challenge to contain overall expenditures on these drugs.
As obesity rises, more patients are at risk of subsequent and chronic conditions such as diabetes, hypertension and cardiovascular disease. It’s not a small issue: More than one in five adults had obesity as of 2022, according to the Centers for Disease Control and Prevention (CDC). Due to how common obesity is in the United States as well as the cost implications, if and when GLP-1 drugs are covered is a primary area of focus.
For plan members with large employer private insurance coverage that had no overweight or obesity diagnosis on their health insurance claims, the average total annual health costs were around $4,700 in 2021. For people with an overweight or obesity diagnosis, the average total health costs in 2021 were more than $12,500, according to the Peterson-KFF Health System Tracker.
Currently, Medicare does not cover GLP-1s for weight loss or indications other than diabetes and cardiovascular disease. Consequently, many commercial health insurance plans do not currently cover GLP-1s for weight loss. However, that could change if federal legislation passes that supports Medicare coverage for GLP-1s prescribed for weight loss for patients diagnosed with obesity.
As commercial plans often follow Medicare’s lead, the legislation passing could rapidly lead to commercial insurance companies covering GLP-1s for weight loss. And with ongoing research leading to more approved indications for GLP-1s, it's important for employers to work with their brokers and pharmacy benefit managers to put cost containment strategies in place today.
How to get ready for change
While GLP-1s may come with higher upfront costs, their longer-term value in managing chronic diseases and improving overall health makes them an essential part of future health strategies. As coverage and costs increase, here’s how to get ready:
Activate lifestyle programming
Tap into clinical weight loss and diabetes programs. Personalized, customizable clinical programs generally generate better outcomes than apps or programs that cannot be individualized. For example, wellness programs that don't have a targeted purpose may not be moving the needle - be sure to evaluate if your current spending is working and be ready to pivot as needed.
Prior authorization
Employer spending can be somewhat contained using prior authorization protocols. Work with your PBM to help ensure you have the most effective prior authorization policies in place to meet your strategic goals.
Calculate costs
While GLP-1s will help members reduce their future health care costs, despite management efforts, GLP-1s will have an inevitable impact to 2025/2026 pharmacy spend. Count on the percentage of spending on GLP-1 drugs to at least double over the next one to two years. This will have an impact on stop loss insurance, so be sure to figure that in as well.
The ultimate goal is to improve the health outcomes for plan members while making smart decisions about cost control. The time is now to prepare for the 2025 impacts of GLP-1s.