The percentage of employers who are covering new and trendy weight-loss drugs has risen in 2024, continuing a trend of increasing coverage despite the costs, according to a new survey.

The study, by Mercer, also found that employers are increasingly offering to cover in vitro fertilization for employees who may be having trouble getting pregnant. And, as costs continue rising on average 5.25% in 2024, employers are taking a number of steps to manage costs.

The fastest-growing component of costs is pharmacy benefit costs, which were up 7.7% after rising 8.3% the year prior. One of the main drivers is diabetes and weight-loss drugs like Wegovy and Ozempic (both made by Novo Nordisk) and Zepbound (made by Eli Lilly).

But, while health plans will generally cover these medications for diabetes, not as many do for weight loss.

The survey found that 44% of employers with 500 or more workers cover weight-loss drugs like Wegovy and Zepbound, as well as older medications in the same class like Saxenda (made by Novo Nordisk). That’s compared with 41% in 2023.

Weight-loss drugs are covered by 64% of employers with more than 20,000 employees, up from 56% in 2023.

These drugs, known as GLP-1s, are contributing to a significant spike in pharmaceutical costs and adding to overall health care outlays. The full list price for Ozempic was $969 in the fall, down 9.7% from 2023. The list price for Wegovy was $1,349, down 2.5% from 2023, but still about 20% higher than it was in 2022.

Most commercial health plans and Medicare pay about $290 for Ozempic and $649 for Wegovy, according to an anti-obesity medication cost report prepared by the Department of Health and Human Services.

It should be noted that health plans that cover anti-obesity medications saw a 4.8 percentage-point higher increase in their pharmacy spend in 2023 than plans that don’t cover the drugs, according to a report by Segal Group.

As a result of costs, employers are requiring pre-authorization and trying to ensure that workers are first prescribed other effective and less expensive treatments. That requires clinical coordination between clinicians, pharmacy benefit managers and insurers.

Employers are also increasingly covering in vitro fertilization. The treatment was covered by:

• 47% of firms with more than 500 workers in 2024, up from 45% the year prior.
• 70% of organizations with more than 20,000 employees, up from 47%.

Employer strategies

Respondents in the Mercer survey were also asked to list their most important benefits strategies for the next three to five years. They ranked the following as either important or very important:

• Managing high-cost claimants: 86%
• Managing the cost of specialty drugs: 76%
• Enhancing benefits to improve attraction and retention: 71%
• Improving health care affordability: 66%
• Expanding behavioral healthcare access: 64%
• Enhancing benefits/resources to support women’s reproductive health: 48%
• Offering high-performance networks or steering to high-value care: 45%
• Increasing use of virtual care throughout the health care journey: 42%
• Addressing health inequities/social determinants: 36%

The takeaway

An earlier survey by Mercer, released in September 2024, found that employers had expected a 5.8% increase in health insurance costs, even after implementing cost-reduction measures.

One way employers are trying to address both their and employees’ costs is by offering their employees more plans to choose from. In 2024, two in three large employers offered three or more plan choices, up from six in 10 in 2023.

As well, the country’s largest employers offer an average of five options, compared to four in the year prior.

The Mercer survey concluded that employers would have to balance two priorities:

1. Focusing on health care affordability and ensuring that their staff can afford their copays, coinsurance and deductibles.
2. Managing their plan costs to keep employees’ share of premium reasonable and ensure that the benefits package is within the organization’s budget.

The explosion in demand for new, costly and highly effective weight-loss and diabetes drugs is poised to play an outsized role in increasing the cost of health care, and in turn, health insurance in America.

These groundbreaking drugs — the most popular sold under the brand names Mounjaro, Ozempic and Wegovy — are partly to blame for overall pharmaceutical benefit costs jumping 8.3% in 2023, compared to an increase of 6.4% in 2022, according to a report by Mercer.

The effects are amplified because of the high cost of these drugs — around $1,000 a month — as well as the growing legion of patients being prescribed them.

On the other hand, these GLIP-1 drugs, as they are known, show great promise in helping tackle the obesity epidemic in the country, which contributes significantly to medical costs.

They were originally designed to treat diabetes, but they had a surprising benefit: weight loss, sometimes so significant that patients’ glucose levels dropped below diabetic levels, and the medications are now being prescribed for weight loss in patients without diabetes.

Employers and insurers are now faced with the prospect of exploding drug costs if demand continues to boom and doctors write more prescriptions for them. To head that prospect off, they are trying to formulate approaches that could keep costs from spiraling while still attending to the demand for weight-loss regimens.

Booming demand

While Novo Nordisk A/S’s Ozempic and Wegovy have been on the market for some time for treating diabetes, the latter has been approved to treat obesity using smaller doses. While Ozempic has not been approved for weight loss, doctors commonly use it off-label for weight loss as well.

In November 2023, Eli Lilly & Co. won clearance from the U.S. Food and Drug Administration for its new drug called Zepbound — a version of its diabetes drug Mounjaro — to be used to treat obesity.

People who take these medications can see dramatic weight loss, which has spurred a surge in prescriptions. In 2022, 5 million GLP-1 prescriptions were written, a 2,082% increase from 2019. The market for these drugs is expected to grow to between $100 billion and $200 billion a year within the next decade.

The manufacturers have been struggling to keep up with demand, with Novo Nordisk saying it will take two years to build up production capacity to meet demand. As it does that, it has limited the availability of lower starting doses of Wegovy as it prioritizes a continuous supply of the pharmaceutical for people who already use it.

One of the biggest challenges with these drugs is that people who stop taking GLP-1 drugs regain most, if not all, of the weight they lost. That may require a lifetime commitment to taking these medications for some individuals. Also, many people stop taking these drugs because they say they have no longer derive pleasure from eating, rendering dining a boring experience.

What employers and payers can do

While employers cover the use of GLP-1 drugs as a treatment for diabetes, the story changes when covering them for treating obesity.

The list prices for the drugs — before any copays or coinsurance — range from $936 per month to about $1,350.

GLP-1 drugs are already recommended for treating certain high-risk type 2 diabetes cases, the majority of which are due to obesity. It’s likely that many individuals with type 2 diabetes will end up on a GLP-1 drug at some point anyway.

Mercer’s “National Survey of Employer-Sponsored Health Plans 2023” survey of employers with 500 or more workers found that:

• 35% cover GLP-1 drugs for treating obesity with prior authorization and/or reauthorization requirements.
• 7% said they cover the drug with no special requirements.
• 19% said they don’t cover these drugs but are considering it.
• 40% said they are not considering covering these medications.

According to the Mercer report, some employers have reversed previous coverage of GLP-1 drugs for obesity after utilization spiked, saddling their health plans with a surge in pharmaceutical costs.

For employers who want their plans to cover GLP-1 drugs but need to cap their health care costs, experts recommend a step program for people struggling with obesity as it can help patients lose weight at a lower cost: 

Step one — Focuses on helping the patient change their lifestyle through dietary changes and exercise.

Step two — Focuses on education and ancillary services, such as food delivery or mental health support.

Step three — If they still need help, doctors can prescribe first-generation anti-obesity medications, which are less expensive and often generate satisfactory weight loss.

Step four — If all else fails, doctors prescribe GLP-1s if the plan covers them, fully or partially.

Mercer also recommends that for individuals who have achieved their desired weight loss and health improvements through GLP-1 drugs, physicians may want to consider tapering them off them at some point, while focusing on sustaining the weight loss and improved health through adhering to lifestyle changes.