How GLP-1s Impact Healthcare Benefits for Self-Insured Employers

By Team PCM | May 30, 2024 | Blog Post, Plan Management, Contract Management

In the ever-evolving healthcare landscape, the introduction and growing utilization of GLP-1 receptor agonists (GLP-1s) represent a significant shift, particularly in managing diabetes and obesity. This evolution brings opportunities and challenges for self-insured plans, influencing overall healthcare spending and necessitating strategic adjustments in formulary development.

What Are GLP-1s?

GLP-1 receptor agonists are medications that act like the hormone GLP-1, which helps control blood sugar and appetite. First developed to treat Type 2 diabetes, GLP-1s also help with weight loss. Because of this, they are now also used to treat obesity, which often occurs alongside diabetes.

With nine GLP-1 medications currently on the market, Medicare Part D gross spending on these drugs skyrocketed from $58M to $5.7B from 2018-2022.

Impact on Self-Insured Employer Spend

GLP-1s, while highly effective, come with a high price tag. A 30-day supply of two of the most popular GLP-1s, Wegovy and Ozempic, costs between $900 and $1,350 before insurance or rebates.  While some patients are willing to pay out-of-pocket, many seek employer-sponsored plans to foot the bill. 

The cost of these medications significantly impacts the healthcare spend of self-insured employers. The annual cost of GLP-1s exceeds $11,000 per patient, and as more employees and dependents seek these treatments, the immediate effect is an increase in pharmacy spend.

Despite the upfront costs, GLP-1s have the potential to generate long-term savings by improving overall health outcomes. Effective management of diabetes and obesity can reduce the incidence of complications such as cardiovascular diseases, kidney failure, and other comorbidities, decreasing hospitalizations and associated medical costs over time.

A healthier workforce also means greater productivity, reduced absenteeism, and the potential for lower insurance premiums.

By investing in GLP-1 treatments, employers may see a positive impact on employee health, indirectly benefiting the company’s bottom line.

Formulary Development Adjustments

Given the cost of GLP-1s, self-insured employers need to work closely with benefit advisors and pharmacy consultants to develop formularies that prioritize high-value medications, negotiating favorable terms and ensuring that the most effective treatments are accessible to employees.

Employers can implement utilization management strategies such as prior authorization, step therapy, and quantity limits to manage costs. These strategies ensure that GLP-1s are prescribed appropriately and only to those who will benefit the most, preventing unnecessary expenditures.

Integrating GLP-1s into a broader preventive care strategy can maximize their benefits. Employers can promote lifestyle interventions alongside medication, encouraging employees to adopt healthier habits that enhance the effectiveness of GLP-1 treatments.

Continuous monitoring of drug performance and costs is crucial. Employers should regularly review clinical outcomes and adjust the formulary to include new, more cost-effective alternatives as they become available. This dynamic approach ensures the formulary remains aligned with health and financial goals.

The advent of GLP-1s marks a pivotal moment in healthcare, offering substantial benefits for managing diabetes and obesity. For self-insured employers, the challenge lies in balancing the immediate costs with long-term health and economic benefits. 

Strategic formulary development and proactive drug utilization management can mitigate financial impacts while enhancing employee health and productivity. By embracing these innovative treatments and integrating them thoughtfully into healthcare plans, self-insured employers can navigate this transformation effectively, ultimately reaping the rewards of a healthier workforce.

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Crafting a benefits strategy that balances cost and clinical outcomes is complex. Prescription Care Management (PCM) does the work for you. To see how PCM streamlines every aspect of managing self-insured plans, click here.

How GLP-1s Impact Healthcare Benefits for Self-Insured Employers

By Team PCM | May 30, 2024 | Blog post, Plan Management, Contract Management

How GLP-1s Impact Healthcare Benefits for Self-Insured Employers

In the ever-evolving healthcare landscape, the introduction and growing utilization of GLP-1 receptor agonists (GLP-1s) represent a significant shift, particularly in managing diabetes and obesity. This evolution brings opportunities and challenges for self-insured plans, influencing overall healthcare spending and necessitating strategic adjustments in formulary development.

What Are GLP-1s?

GLP-1 receptor agonists are medications that act like the hormone GLP-1, which helps control blood sugar and appetite. First developed to treat Type 2 diabetes, GLP-1s also help with weight loss. Because of this, they are now also used to treat obesity, which often occurs alongside diabetes.

With nine GLP-1 medications currently on the market, Medicare Part D gross spending on these drugs skyrocketed from $58M to $5.7B from 2018-2022.

Impact on Self-Insured Employer Spend

GLP-1s, while highly effective, come with a high price tag. A 30-day supply of two of the most popular GLP-1s, Wegovy and Ozempic, costs between $900 and $1,350 before insurance or rebates.  While some patients are willing to pay out-of-pocket, many seek employer-sponsored plans to foot the bill. 

The cost of these medications significantly impacts the healthcare spend of self-insured employers. The annual cost of GLP-1s exceeds $11,000 per patient, and as more employees and dependents seek these treatments, the immediate effect is an increase in pharmacy spend.

Despite the upfront costs, GLP-1s have the potential to generate long-term savings by improving overall health outcomes. Effective management of diabetes and obesity can reduce the incidence of complications such as cardiovascular diseases, kidney failure, and other comorbidities, decreasing hospitalizations and associated medical costs over time.

A healthier workforce also means greater productivity, reduced absenteeism, and the potential for lower insurance premiums.

By investing in GLP-1 treatments, employers may see a positive impact on employee health, indirectly benefiting the company’s bottom line.

Formulary Development Adjustments

Given the cost of GLP-1s, self-insured employers need to work closely with benefit advisors and pharmacy consultants to develop formularies that prioritize high-value medications, negotiating favorable terms and ensuring that the most effective treatments are accessible to employees.

Employers can implement utilization management strategies such as prior authorization, step therapy, and quantity limits to manage costs. These strategies ensure that GLP-1s are prescribed appropriately and only to those who will benefit the most, preventing unnecessary expenditures.

Integrating GLP-1s into a broader preventive care strategy can maximize their benefits. Employers can promote lifestyle interventions alongside medication, encouraging employees to adopt healthier habits that enhance the effectiveness of GLP-1 treatments.

Continuous monitoring of drug performance and costs is crucial. Employers should regularly review clinical outcomes and adjust the formulary to include new, more cost-effective alternatives as they become available. This dynamic approach ensures the formulary remains aligned with health and financial goals.

The advent of GLP-1s marks a pivotal moment in healthcare, offering substantial benefits for managing diabetes and obesity. For self-insured employers, the challenge lies in balancing the immediate costs with long-term health and economic benefits. 

Strategic formulary development and proactive drug utilization management can mitigate financial impacts while enhancing employee health and productivity. By embracing these innovative treatments and integrating them thoughtfully into healthcare plans, self-insured employers can navigate this transformation effectively, ultimately reaping the rewards of a healthier workforce.

—

Crafting a benefits strategy that balances cost and clinical outcomes is complex. Prescription Care Management (PCM) does the work for you. To see how PCM streamlines every aspect of managing self-insured plans, click here.