Gallagher Re has examined the potential risks and implications for insurers, employers, and payers arising from the growing use of GLP-1 weight management drugs like Ozempic, Wegovy and Mounjaro.
These drugs, initially developed to treat type 2 diabetes, have gained traction for weight management, leading to increased prescription spending among employer-sponsored health plans.
According to Gallagher Re, plan sponsors and reinsurers are closely monitoring the long-term financial impact of GLP-1 therapies, considering both potential savings from improved health outcomes and higher costs tied to increased utilization.
Data shows that GLP-1 medications now account for at least 9% of overall prescription spending in many employer plans. The non-specialty prescription drug trend has risen from approximately 3.2% in 2023 to between 10% and 12% in 2024, largely due to the increasing use of these therapies.
In its report, Gallagher Re’s calculations estimate that GLP-1 drugs could contribute an additional 1% to 2% to overall medical cost trends. This estimate is based on per-member-per-month (PMPM) prescription costs compared to total medical PMPM spending.
Business Group on Health projects a 7.8% increase in healthcare spending in 2025, with an adjusted estimate of 6.6% accounting for plan changes. The extent to which GLP-1 therapies contribute to these cost increases remains dynamic and difficult to isolate.
Weight management drugs like Ozempic have garnered significant attention in the United States for their effectiveness in aiding in weight loss.
However, insurance coverage for these medications varies widely, influenced by factors such as the intended use (diabetes management vs. weight loss), state regulations, and specific insurance plan policies.
Coverage varies by state under the Medicaid program. Some states list medications like Wegovy on their preferred drug lists, but prior authorization may be required, and there could be quantity limits.
On the other hand, Medicare Part D does not cover weight-loss medications, including GLP-1 drugs like semaglutide, when prescribed solely for obesity treatment.
As for private insurers, coverage is highly variable. Some employer-sponsored plans include these medications, while others do not. Coverage often depends on the specific terms of the insurance policy and the employer's decisions regarding health benefits.
Gallagher Re’s research indicates that the immediate impact of GLP-1 drugs on specific stop-loss insurance is minimal. The annual cost of GLP-1 therapies per member ranges between $10,000 and $12,000, which does not typically exceed high-excess stop-loss deductibles.
However, insurers are assessing whether complications such as pancreatitis, gallbladder disease, and gastrointestinal issues could increase exposure to large claims over time. Gallagher Re notes that future approvals of GLP-1 therapies for conditions such as heart failure or Alzheimer’s could shift risk profiles, potentially reducing the severity of some claims.
While the effect on high-excess claims has been limited, Gallagher Re reports that insurers anticipate a moderate impact on aggregate medical cost trends. Many employees and dependents are using GLP-1 medications beyond type 2 diabetes treatment, including for weight loss or pre-diabetes, contributing to a rise in total PMPM costs.
Gallagher Re notes that many stop-loss and reinsurance carriers are waiting for additional claims data before making adjustments to underwriting models, surcharges, or premium discounts related to GLP-1 coverage.
While some carriers see potential cost offsets from reduced obesity-related complications, near-term challenges include rising prescription drug spending, possible side effects, and increased demand for weight-loss-related medical procedures.
The development of new weight-management drugs is another factor shaping the risk landscape. Gallagher Re highlights the potential for compounded versions of GLP-1 therapies and future biosimilars to reduce unit costs.
However, these alternatives may introduce new safety and efficacy considerations that could further complicate underwriting decisions. As carriers update annual aggregate trend assumptions, Gallagher Re emphasizes the importance of tracking advancements in GLP-1 therapies and their broader impact on healthcare costs.
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