Reduce the Impact of GLP-1s on Your Health Plan Spending

MAY 6, 2025

Exploding demand for GLP-1 medications has driven up pharmacy costs for employers, resulting in much higher premiums and health plan expenses. Although self-funded group health plans are not currently required to cover these medications, they are commonly viewed as a necessary expense — and most group health plans cover GLP-1s for Type 2 diabetes.

GLP-1s (short for “glucagon-like peptide 1 receptor agonists”) are considered a front-line drug for treating Type 2 diabetes as they have proven effective at lowering blood sugar and reducing the risk of serious complications. However, injectable GLP-1s can cost between $8,000 and $10,000 per user, per year. For USI clients, adult plan members with Type 2 diabetes who take a GLP-1 cost their employers $21,758 per year on average, compared to $13,961 for members who do not take these drugs. That’s nearly $7,800 more per member, per year. Because of this, employers have had to balance between investing in short-term expenses and long-term savings.

GLP-1s have also proven effective at managing weight loss, contributing to the surge in demand — and creating another problem for employers. Medications like semaglutide and tirzepatide, approved to treat Type 2 diabetes, were found to be more effective for weight loss than liraglutide, the only GLP-1 approved to treat obesity since 2014. But unlike diabetes, many health plans do not cover GLP-1s for weight loss. This led to an increase in off-label usage of the more expensive semaglutide and tirzepatide, resulting in higher health plan costs. Increasing interest in GLP-1s as a weight loss strategy — and the FDA’s approval of semaglutide in 2021 and tirzepatide in 2022 for this purpose — fueled a nationwide shortage through early 2025.

Employers have tried various approaches to help reduce the number of GLP-1 prescriptions and minimize the impact on health plan spending, including carve-outs, prior authorizations, and exclusions. Even with these guardrails in place, patients continue to seek access. A recent analysis of USI client health plans noted a 77% increase in Type 2 diabetes diagnoses without complications between 2021 and 2024, far outpacing what we’d normally expect. While it’s possible that more plan members are addressing diabetes with their physicians, this trend may suggest an increase in diabetes or prediabetes diagnoses based on the desire to access GLP-1 medications.

Options for Employers Considering GLP-1 Access

Given the continued popularity of GLP-1s for weight loss, some employers are evaluating ways to provide access as an enhanced benefit and improve plan member health, despite the costs:

Direct to consumer – Some organizations have chosen to steer plan members to manufacturers offering direct access to GLP-1s, outside of the employers’ health plans. Employees take on 100% of the cost of the medication. Organizations offering this option may choose to offset employee out-of-pocket costs by adding a health reimbursement arrangement, though there are compliance considerations with this approach.

Weight management programs – Other employers are working with comprehensive weight management vendors that combine behavioral modification with clinical intervention, and use medical expertise to steer patients toward appropriate treatment options. These vendors can also assist with managing access to GLP-1s specifically for weight loss, removing this burden from the employer. Some vendors will also include medical provider support to help increase the likelihood of patient success with GLP-1s.

Strict prior authorization for Type 2 diabetes – For health plans that cover GLP-1s for diabetes, employers should review their health plan’s prior authorization process and ask their pharmacy benefits manager (PBM) about implementing stricter requirements, such as prior history of diabetes or HBA1C levels, as well as requiring lower-cost alternative therapies first.

Formulary management – Organizations that don’t have the budget or aren’t interested in expanding GLP-1 coverage for weight loss could consider a formulary management approach to help reduce costs. Employers can discuss additional guardrails with their PBM, such as adding another drug tier for GLP-1s, limiting early refills, or increasing the BMI requirement above the FDA minimum guidelines to cover plan members at higher risk of obesity-related complications.