Weight-loss Drugs: To Pay or Not to Pay?

With obesity reaching epidemic levels in much of the world, more people are turning to weight-loss drugs in their quest for longevity and wellness. The demand for injectable prescription drugs— known as GLP-1s — is quickly expanding, with as many as 1.4 million Canadians currently using these drugs.¹ While Ozempic and Mounjaro are prescribed to treat diabetes and are generally covered under insurance plans, other GLP-1 medications, like Wegovy and Zepbound, are approved for weight-loss only, causing insurers uncertainty about how, or if, to cover them.

These medications have become wildly popular to treat more than just diabetes and obesity, and they’re also being used as a preventative medication against heart disease, strokes and other conditions. 

While Health Canada has approved some of these drugs specifically for treating diabetes, the popularity has resulted in shortages for non-diabetic use, and plan sponsors have been limiting the off-label use of drugs like Ozempic for weight-loss treatment.² These prescriptions are more expensive than most — averaging between $200 and $300 a month.³ Patents for these drugs won’t expire for another decade, which would open the door to lower cost alternatives,⁴ and about half of all GLP-1 users plan to take them for life.⁵

However, anti-obesity drugs can help employees and may ultimately cut costs. In Canada, two out of three adults and one in three children are classified as overweight or obese,⁶ which is predicted to cost the Canadian economy an estimated $22,974 million annually due to decreased tax revenue, employee activity and increased healthcare costs.⁷

Employers that provide weight-loss treatment and medications as part of their health insurance are usually obligated to cover the cost of GLP-1 medications. More than two-thirds of employers provide GLP-1 drug coverage for diabetes, but only 17% cover the medication for both diabetes and weight loss, though nearly 10% of companies said they are considering covering the medication for weight loss.⁸

The booming demand for GLP-1s — as well as the rising cost of specialty drugs — is having an impact on drug insurance costs: Drug spend per plan member rose 6.3% in 2022, with more than 10% of the increase attributed to spend per claim for diabetes medications like Ozempic.⁹

Despite rising costs, offering these treatments can also result in long-term cost savings. Employers must decide to what degree they’ll cover GLP-1 treatments for weight loss. While eliminating them will result in immediate savings, those employers that do so could be at a competitive disadvantage for talent as people seek companies with better benefit offerings.

But employers need to do the math: Will these drugs offset the long-term impacts of obesity? Will employees remain long enough for the company to realize savings? Will covering these drugs be a differentiator in attracting and retaining talent? Answering these questions will help employers decide if, and to what degree, they’ll cover GLP-1 treatments for more than diabetes.

The HUB EDGE

Employers need to evaluate if access to GLP-1s to treat obesity aligns with their employee population’s wants and needs. Having the right tools and guidance can help employers formulate a strategy.

Employers should do the following:

• Take a long-term company view. Does the benefit of weight-loss drugs outweigh the costs in the long run? Obesity remains the biggest contributor to diabetes, and employees with the illness cost Canadian employers nearly $1,500 each in lost productivity. ¹⁰ In addition, workers with obesity are seven times more likely to have poor health and three times more likely to suffer from mental health issues than those at a healthy weight. By offering GLP-1s to obese workers, employers can improve employee physical and mental health, increase productivity and reduce absenteeism.

• Weigh the effect on recruitment and retention. As GLP-1s become mainstream, employees may expect their employers to cover their prescriptions for weight loss. Removing the class of drugs altogether could hurt recruiting and retention. But it’s also important to consider if premium increases associated with the additional costs will be sustainable.

• Consider other obesity reduction options. Employers are increasingly acknowledging that obesity is a chronic health condition and that treating it as such is a form of diabetes prevention.¹¹ While GLP-1 coverage for obesity is one option, employers can also explore offering medical nutrition therapy, psychological and behavioral support or surgical interventions to improve worker health without the pharmacotherapy expense.¹²

¹ CBC, “Ozempic is changing the way people eat. Snack companies are paying close attention,” July 4, 2024.

² Benefits and Pensions Monitor, “Plan sponsors may only have a few months to decide how they’ll cover obesity drugs,” February 20, 2024.

³ CBC, “Despite social media buzz, Ozempic is not a quick-fix weight loss solution, doctors say,” March 8, 2023.

⁴ PharmaVoice, “3 patent expirations in 2024 and how companies are pivoting,” April 17, 2024.

⁵ Deloitte, “Growth of GLP-1s has implications for multiple stakeholders,” September 21, 2023.

⁶ Government of Canada, “Message from the Minister of Health and Minister of Sport and Physical Activity – World Obesity Day,” March 4, 2024.

⁷ Springer Link, “Assessing the Fiscal Burden of Obesity in Canada by Applying a Public Economic Framework,” November 18, 2023.

⁸ International Foundation of Employee Benefit Plans, “GLP-1 Drug Coverage in Canada,” February 21, 2024.

⁹ Benefits and Pensions Monitor, “Specialty drug costs are levelling off, but what lies ahead for 2024?” February 8, 2024.

¹⁰ Benefits by Design, “Why you should offer obesity management coverage,” April 30, 2024.

¹¹ Benefits Canada, “A closer look at how chronic conditions are impacting benefits plans,” October 13, 2023.

¹² Canadian Medical Association Journal, “Obesity in adults: A clinical practice guideline,” August 4, 2020.