- A new class of medications that help people lose weight has exploded in popularity.
- Companies that pay for workers’ health insurance are grappling with how to cover the pricey drugs.
- Some online weight-loss startups are racing to pitch themselves as the solution to employers’ dilemmas.
Rich Krutsch first noticed a sudden uptick in the use of diabetes drug Ozempic at his company eight months ago.
Insurance data at ArcBest, where Krutsch is vice president of people services, didn’t show an increase in workers with diabetes. Instead, Krutsch suspected some employees were using the expensive injection to lose weight.
Now, ArcBest, an Arkansas shipping company that provides health insurance for 10,600 people, including workers and their families, is hurrying to find ways to manage the use of drugs like Ozempic for weight loss. Ozempic is part of a group of trendy prescription medications that have exploded in popularity for helping users lose weight, so ArcBest is far from the only company confronting this challenge.
“This is a huge concern for employers because these drugs are super expensive, and there’s a lot of demand for them. And frankly, there’s a lot of demand when it’s not clinically appropriate,” said Owen Tripp, the CEO of Included Health, a care-navigation company that works with employers including ArcBest.
Already, Ozempic is ArcBest’s fourth-costliest drug, and Krutsch suspects the avalanche of demand for weight-loss medications is just beginning. The company is evaluating various healthcare startups to help.
More than 150 million people get insurance coverage through their jobs, and employers often work with insurers to set their coverage rules. Without coverage, many people won’t be able to afford drugs like Ozempic, which cost about $1,000 to $1,300 a month.
More than 40% of American adults are considered obese, which is associated with chronic illnesses such as heart disease, diabetes, and hypertension. Adults taking semaglutide, the drug sold under the brand names Ozempic and Wegovy, can lose 15% of their weight on average.
Here’s the dilemma facing employers: The drugs work, and covering them could help companies improve their workers’ health and keep them on the job, while potentially reducing what they spend on obesity-related health problems. But the cost of the drugs, which must be taken long term, is a tough pill to swallow for companies already dealing with high premium increases, inflation, and difficulty finding and keeping workers.
New weight-loss drugs work, but they’re expensive
In the past year, medications like Ozempic and Wegovy, both made by Novo Nordisk, have gone viral as celebrities and influencers tout them as an easy way to get skinny and weight-loss startups flood social media with ads. Similar drugs, known as GLP-1 agonists, include Saxenda, the brand name for liraglutide, also from Novo Nordisk, and Eli Lilly’s Mounjaro, the brand name for tirzepatide.
Only Wegovy and Saxenda are FDA-approved for weight loss for people who are significantly overweight or obese, but doctors can prescribe the others for unapproved uses. Doctors began prescribing Ozempic “off-label” for weight management when Wegovy, a more potent option, was in short supply last year.
Ozempic’s sale surged 77% last year to about $8.5 billion, while sales of Wegovy more than quadrupled, to about $880 million.
Currently, most companies don’t cover the drugs for weight loss, putting them out of reach for many people. A 2022 survey from the International Foundation of Employee Benefit Plans found that just 22% of companies are covering the drugs for weight loss.
Dr. Disha Narang, the director of obesity medicine at Northwestern Lake Forest Hospital, said that for her patients who don’t have type 2 diabetes, getting a health insurer to cover the medications is “extremely difficult.” Prior authorization requests are often rejected, she said.
To Narang, the lack of coverage doesn’t make sense.
“They’re willing to cover the heart attack and the cath and joint surgery and bariatric surgery, but why aren’t we preventing this stuff in the first place?” she said.
Employers worry about ballooning costs
Companies that pay for their employees’ health insurance historically haven’t covered obesity medications, said Jeff Levin-Scherz, the population health leader at WTW, formerly Willis Towers Watson, which helps companies design their health benefits.
Society has long viewed obesity as a failure of willpower, rather than a disease that deserves to be treated, and that’s how job-based and other types of insurance have approached it, he said.
That’s changing, albeit gradually. Levin-Scherz said between half and two-thirds of employers involved in WTW’s drug-purchasing coalition cover the GLP-1 drugs for weight loss, though some may require people to try another drug or lifestyle program first.
Medicare, the federal program that provides health coverage for people 65 and older, doesn’t cover weight-loss drugs. Medicaid, which provides health insurance for low-income people, covers the drugs in fewer than 20 states, according to a report by the Urban Institute.
Employers, already facing steep increases in the cost of their health-insurance plans driven by inflation, are trying to figure out how to make the drugs available to those who would benefit, without sending their health-plan premiums through the roof or cutting back on other benefits, Levin-Scherz said.
“If there’s a good treatment for obesity, it’d be nice to make it available for a lot of people, but on the other hand, employers are trying hard to just keep employer-sponsored health-insurance affordable,” Levin-Scherz said.
Startups are rushing to help companies manage employee access to weight-loss drugs
Some health startups that advertise weight-loss medications to consumers are now rushing to pitch themselves as the solution to employers’ dilemmas.
Isabelle Kenyon, the CEO of Calibrate, a weight-loss startup that offers patients a combination of GLP-1 medication and virtual coaching, told the podcast “WTF Health” in November that its program is available to employers to offer as a benefit for workers. She said Calibrate has signed up three clients, including the HR-software company Workday.
Found, another consumer weight-loss startup, is having conversations with a handful of employers, its CEO Sarah Jones-Simmer told Insider. Found’s online program includes consultations, behavior coaching, and medication. Found clinicians can prescribe GLP-1 drugs, but Jones-Simmer said those aren’t always the best option. Other generic drugs, such as metformin, can be effective, cheaper alternatives, she said.
“For most of the employers that are talking to us, it’s actually not a question of, how do we get more people on this?” Jones-Simmer said, referring to GLP-1 medications. “It’s how do we get the right people on this? And how can we offer something else for others that need a medically supported approach to weight loss?”
Meanwhile, Evan Richardson, the CEO of Form Health, an online weight-loss clinic that works primarily with employers, said he’s found that companies are less concerned about cost than they are about ensuring employees get quality care — especially with growing concerns about people who don’t qualify accessing the drugs or getting them in ways that are unsafe.
“They recognize that low-quality care and mis-prescribing is all of a sudden rampant in this space,” said Richardson, who declined to say how many companies Form works with.
But he said Form is able to win over employers by showing it can get the right care to the right patients. Form’s patients meet frequently with a doctor and registered dietitian who treat the patient’s conditions that can cause weight gain while addressing factors like diet, behavior, and exercise. Some patients are prescribed GLP-1 medications because they can’t make progress without them, but others can lose weight on lower-cost options or without drugs, Richardson said.
ArcBest already has a program to help workers lose weight through behavior changes and nutrition. Krutsch said he wants to build on that, covering the weight-loss drugs Wegovy and Saxenda for employees who aren’t able to lose weight without medication.
The new weight-loss drugs were in short supply in 2022, and that gave employers time to figure out how to handle them, he said. But he said some companies still don’t see the urgency, and that puzzles him.
“Left to the marketing and the word-of-mouth and all of the buzz coming out of Hollywood with people like Elon Musk and others, I think it could be very expensive,” Krutsch said.