The new anti-obesity drugs present a challenge, an opportunity for employers

Modern understanding of obesity has changed, as medical professionals now recognize that obesity is not simply the result of a lack of willpower; rather, it is a chronic disease. This change is making a new class of anti-obesity drugs like Wegovy especially valuable. These drugs are highly effective, well tolerated and safe and could improve the health and lives of millions of people. But these drugs are very expensive, and paying for them will pose a huge challenge to employer-sponsored health insurance. In the following article, we look at the promise of this new class of drugs and various potential employer approaches to addressing the associated high costs.

Obesity: evaluate the problem

Obesity rates have increased dramatically in recent decades; 42% of the US adult population is now obese and 31% is overweight. Obesity is associated with poorer medical outcomes, including higher rates of type 2 diabetes, heart disease, degenerative arthritis, depression and many cancers. Those who are obese also face social discrimination and are likely to be underpaid and promoted less frequently. Obesity is also a health equity issue; those on lower incomes and people of color are more likely to be obese.

Losing weight is difficult, especially for the obese. Our bodies have evolved to maintain weight by slowing down our metabolism when we eat fewer calories. Even highly motivated people who have been able to lose massive amounts of weight through programs like Biggest Loser have struggled to maintain that weight loss.

Many efforts to fight obesity have not been helpful, and some have proven dangerous. Most dietary interventions lead to short-term weight loss, but people regain weight quickly. Some weight loss companies trumpet misleading success rates by selectively reporting results for a minority of participants. Previously available anti-obesity drugs were often only moderately effective and often had negative side effects. A combination drug, fenfluramine/phentermine, was pulled from the market when it was found to cause life-threatening pulmonary hypertension and heart valve damage.

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There have been some bright spots in the treatment of obesity prior to this new class of drugs. Very low-carb ketogenic diets are associated with sustained weight loss, although some find this diet difficult to maintain. Bariatric surgery leads to an average weight loss of 30% after the first year, although there is some weight gain in subsequent years. Historically, many employers have not covered it and few have promoted it. As a result, only a small minority of those meeting the clinical criteria underwent bariatric surgery.

What are GLP-1 drugs?

This brings us to this relatively new class of drugs, GLP-1 (glucagon-like peptide) agonists, which have been used for over 18 years to treat type 2 diabetes. These drugs reduce appetite and create an of fullness, so people eat less. GLP-1 drugs have been associated with better blood sugar control and weight loss. Although indicated for type 2 diabetes, these drugs have been increasingly used for weight loss. All but one of the currently available products are administered by self-injection, and side effects often include initial nausea and gastrointestinal distress, which usually resolves within a few weeks. These drugs have a good long-term safety profile when used to treat people with diabetes, although they have been associated with rare cases of inflammation of the pancreas and a potential increased risk of a rare type of thyroid cancer.

There are two GLP-1 agonists currently marketed for obesity: liraglutide (Saxenda) and semaglutide (Wegovy); a third, tirzepatide, is expected to be approved later this year. There are also more additional similar drugs in various stages of clinical trials, many of which will be available in pill form.

These drugs have achieved rapid public success. Social media influencers have advocated off-label use of diabetic versions of these weight-loss drugs, and these drugs were even mentioned in the opening monologue at this year\’s Oscars. Several telehealth companies offer virtual consultations to those seeking prescriptions for these weight loss drugs.

These drugs have also been approved by relevant medical societies. The American Gastroenterological Association recommends prescribing anti-obesity medications for those with a body mass index (BMI) of 30 or more, or a BMI of 27 or more if the patient has diabetes or other metabolic conditions. This is consistent with the l Food and Drug Administration approved labeling. These criteria make more than 40% of adults eligible for treatment, although those with severe kidney disease or who are pregnant or planning to become pregnant may not be appropriate for this drug class.

Addressing the cost of anti-obesity drugs

The challenge of GLP-1 drugs is cost.

GLP-1 drugs are among the most expensive drugs for employers, and costs of anti-obesity drugs in employer-sponsored health insurance increased 3.5-fold in the first two months of 2023 compared to all of 2022 , according to unpublished WTW data.

The net costs (plan and member combined) for each person on Wegovy, after estimated markups and discounts, are approximately $9,000 per year. If half of those eligible were to request GLP-1 prescriptions, the cost of the pharmacy could increase by more than $70 per member per month across the entire population, even assuming some denials and some not refilling drugs. This is especially unwelcome news for employers who face the largest premium hikes in over a decade this year!

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Obesity is associated with higher medical costs, so the widespread use of effective anti-obesity drugs could reduce some future medical bills. However, the Institute for Clinical and Economic Review (ICER) has calculated that these drugs are by no means cheap. ICER estimates that the use of these drugs will cost more than $200,000 per quality-adjusted life year, meaning the cost will far exceed the medical savings. These obesity drugs, like most medical treatments, offer a better life but do not provide cost savings, even for years or decades.

Most employers now provide coverage for bariatric surgery, and the cost of surgery averages around $30,000, although this can vary widely. For employers with high employee turnover, GLP-1 drug coverage may be less expensive than bariatric surgery coverage. We anticipate that the availability of this class of medicines will result in fewer members turning to bariatric surgery.

All employers should keep an eye on these drugs when preparing budgets for the coming years. Increased use of these drugs could reduce some future health care costs and reduce costs due to absenteeism, lost productivity and mental health spending. Access to these drugs could also improve employee recruitment and retention. However, they won\’t ultimately save your medical budget even at significantly discounted prices.

The cost of treatment may decrease with more new entrants, as has happened with antiviral drugs for hepatitis C. However, the availability of new and improved drugs has paradoxically increased the prices of existing drugs in some drug classes.

Commonly prescribed anti-obesity drugs


Considering options with anti-obesity drugs

Employers have options about how or whether to cover these drugs. All options include trade-offs, and different approaches may be more appropriate for different businesses. Note that pharmacy benefit managers may not accept options that may reduce discounts.

Option 1: Exclude coverage for these drugs.

Employers who choose not to cover obesity medications will have lower drug costs and will be better able to contain increases in member premiums. However, some of their members will seek off-label prescriptions for versions of these drugs approved for diabetes treatment. Higher-wage, better-educated members are more likely to get drugs this way, which could increase inequality. Employers may find themselves at a recruiting and retention disadvantage if competitors offer coverage.

Option 2: Cover these drugs but with restrictions.

Those with severe obesity get the most out of anti-obesity drugs, so some employers may choose a higher body mass index to be eligible for coverage. This would reduce the cost of medicines and a higher proportion of those treated would realize medical savings. Some members with below-the-threshold BMI may seek out off-label diabetes medications.

Some employers may cover these drugs, but enforce strict rules that require prior medically supervised diets and a trial of less expensive anti-obesity drugs before approval. Employees and physicians do not like prior authorization requirements and, in some cases, this will delay rather than prevent prescriptions altogether.

Currently, a formulary restriction is difficult because semaglutide is much more effective and convenient than liraglutide. However, a narrow form will be more practical once tyrzepatide is approved because, like semaglutide, this drug is a weekly injection and is associated with 14% or greater weight loss. An employer that limits the formulary to just one of these drugs could potentially get lower purchase prices.

Option 3: Lax coverage: Provide coverage for these drugs whenever a doctor says they\’re medically necessary with minimal review.

Employers may choose to provide coverage for these drugs as much as they cover other prescribed drugs. Total drug costs are likely to be high; members will likely be satisfied and the firm may gain a competitive edge in hiring.


The approval of this new class of weight-loss drugs is a major advance in medical care, although their currently high costs present a challenge to employer-sponsored health plans. Organizations should be aware of the potential cost implications and should carefully evaluate benefit design and weigh implementation programs to address potential increases in drug spending.

The following authors contributed to this article:

Chantell Reagan Sell, PharmD is Director and National Pharmacy Practice Clinical Lead at WTW.

Dorothy Wilkes, PharmD is a director of WTWs Pharmacy Practice organization.

Dennis Barrette, MBA is a director of the WTW Pharmacy Community.

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