Coverage Considerations for Weight Loss Medications

Coverage Considerations for Weight Loss Medications

February 06, 2024

Employee benefits often fly under the radar. But the explosion of headlines on weight loss medications has moved coverage considerations front and center.

Weight loss injectables Ozempic, Mounjaro and Wegovy have become mainstream topics, and odds are your employees have noticed. Surveys indicate these medications may already be an attraction and retention tool.

A Kaiser Family Foundation survey found 70% of respondents were aware of these weight loss medications. HR Brew reports nearly 45% of employees would take a new job to get coverage for obesity management.

With growing awareness and demand for these medications, it’s imperative for organizations to consider coverage options.

Background information

Ozempic, Mounjaro and Wegovy are three of the most well-known prescription medications for weight loss. They are once-a-week injectables, and users must continue using them to maintain health gains.

The Food and Drug Administration (FDA) approved Ozempic to manage diabetes in 2017. Wegovy received FDA approval in 2021 to treat obesity in combination with diet and physical movement. And Mounjaro was approved in 2022 to treat Type 2 diabetes. Some insurers and employers give pause because FDA approval for two of the products is based on diabetes treatment. However, off-label usage is growing. Many view all three as part of a strategy to manage obesity.

The potential upsides are plentiful. Clinical trials have shown an average of 5% to 15% weight loss at six- and 12-month checkpoints. Some users have lost up to 20% of their body weight.

Healthy weight management reduces employees’ risk for many medical conditions, including diabetes, heart disease, stroke, kidney disease and multiple forms of cancer. A study of Wegovy showed a 20% risk reduction for serious heart ailments, reports the industry news site BenefitsPRO.

Although the drugs are in high demand and show high upsides, they also come with high prices. These injectable medications currently cost upward of $1,000 per month per employee. BenefitsPRO estimates the drugs could increase employer costs by 25% a year. Some employers, such as the University of Texas System, have stopped coverage due to million-dollar jumps in plan expenses.

Price isn’t the only barrier. As noted, individuals must be willing to inject themselves every week. To maintain effectiveness, these medications must be used for life. Some users may want to stop because of serious side effects, including nausea, bowel obstructions and other digestive issues. But stopping will undo the health benefits. In addition, effectiveness is not guaranteed. The average weight loss is between 5% and 15%, but BenefitsPRO reports weight loss of less than 5% for a sizable percentage of users.

These early results have led to some reservations from employers. According to industry news site Becker’s Payer Issues, employers’ main concerns regarding weight loss medications are:

  • Long-term efficacy, patient adherence and side effects: 35%
  • Cost: 29%
  • Stigma: 17%
  • Supply: 14%

Coverage considerations

There are no easy answers to high-demand, high-cost medications. It’s particularly complex for employers because there is great potential for health gains, but long-term data doesn’t yet exist for such new drugs.

The following considerations can help inform your coverage decisions.

Long-term mindset

You should establish coverage with long-term goals in mind. The initial expense is high, and most gains are predicted to come from eventual cost reductions. For example, you could see reduced expenses related to diabetes, heart disease, high blood pressure and other serious health conditions.

Employee utilization is a vital factor in your coverage considerations. Use plan data and surveys to uncover employee interest and predict utilization rates. More than 40% of U.S. adults are considered obese, according to the National Health and Nutrition Examination Survey. That number is expected to rise over the next decade.

Investing now could pay off if a significant portion of employees see improvements in chronic health conditions. Healthier weight management improves fatigue, back pain, sleep apnea and other chronic issues. This can lead to organizational gains through fewer sick days and greater productivity. Absenteeism due to obesity costs employers $8.65 billion a year, and productivity losses total $66 billion annually, according to the International Foundation of Employee Benefit Plans (IFEBP).

Current coverage options

The new prescription medications are getting the headlines, but they aren’t the only weight loss options. Review your current coverage regarding obesity and weight loss. The IFEBP reports 22% of employers cover weight loss-related prescription drugs, and 45% cover bariatric surgery. Understanding the options your employees want and will use can inform your coverage decisions.

If you decide to cover weight loss injectables, examine whether you would work with a care team to manage the usage of these medications. A care team might include doctors, dietitians, health coaches and therapists. 

Additionally, explore prior authorization or step therapy requirements. These options require employees to try other strategies before gaining approval for weight loss injectables. For example, employees might need to first use behavioral support measures. This could involve cognitive behavioral therapy, or working with in-person or virtual care teams of dietitians, physicians and health coaches.

Workplace health and culture

The new weight loss medications aren’t intended to be a stand-alone solution. To manage obesity, patients also must incorporate healthy eating and movement.

It’s important for employers to acknowledge the complexity of obesity. Cultural, physiological and mental factors all affect the condition. Your workplace and office culture also play a role in weight management.

Convenience makes a big difference in people’s food choices. Stocking healthy and readily available food in kitchens, cafeterias, break areas and vending machines can help employees begin or sustain healthier habits.

Healthy meal delivery services or packaged food subscriptions are other ways to support employees. These options can benefit all employees, including remote workers without access to on-site amenities.

Wellness programs should incorporate a range of healthy habits. Options include:

  • Nutrition education on how to read labels and understand daily dietary guidelines
  • Cooking classes
  • Shared tips and recipes for healthy food
  • Digital tools for lifestyle management, such as nutrition apps and fitness wearables
  • Gym memberships or discounts
  • Online or on-site fitness classes

You can further enhance a healthy culture by normalizing breaks and encouraging employees to stretch, hold walking meetings and move throughout the workday.

Industry standards

Benchmarking industry standards provides insights into the competitiveness of your benefits.

Due to cost, coverage of weight loss medications is mostly limited to large employers for now. But they are gaining traction among these organizations. HR Executive reports 49% of large employers plan to cover these medications in 2024. And more than 60% plan to provide coverage within two years.

But many other employers and some insurance companies are electing not to cover weight loss injectables because of costs and concerns over long-term usage and results. Your insurance broker can help you collect industry data.

Compliance issues

With any new medication, it’s essential to review the legal implications with your counsel. In particular, ensure coverage of weight loss medication doesn’t indicate encouragement, endorsement or guaranteed results.

Work with your benefits adviser on compliance with the Employee Retirement Income Security Act and the Mental Health Parity and Addiction Equity Act.

Avoid claims of discrimination by ensuring weight loss drugs are voluntary and part of other health initiatives within your benefits offerings. It’s also critical to avoid negative employee perceptions, such as stigmatizing obesity or intruding on employees’ health and personal lives.

Work with your team

As weight loss medications receive more media coverage, you must be prepared to discuss the topic with your employees. If you decide not to cover these medications, provide thoughtful communications and point employees to your other wellness offerings.

To further discuss these medications or implement coverage, talk to your insurance broker or benefits adviser. They can help you examine potential costs and barriers. In addition, they can explore accompanying wellness solutions and communications to get the most out of your coverage.