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.
Weight-Loss Drugs Drive Up Pharmaceutical Costs
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%.
Employers Rank Benefits 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%
Managing Costs for Employers and Employees
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:
- Focusing on health care affordability and ensuring that their staff can afford their copays, coinsurance and deductibles.
- Managing their plan costs to keep employees’ share of premium reasonable and ensure that the benefits package is within the organization’s budget.
