Skip to content
Cost Control

Off-Label Drug Use: Cover for Weight Loss or Not?

The Baldwin Group
|
Updated: April 24, 2024
|
3 minute read

To cover or not is the question many U.S. insurance companies and employers continue to ponder when it comes to obesity medications, such as Wegovy, and diabetes drugs, like Ozempic and Mounjaro, being used off-label for weight loss.

“Most health insurance plans typically don’t cover Ozempic for weight loss, as the medication is currently only FDA-approved for type 2 diabetes treatment.” Source: Bloomberg

With increasing demands from employees to cover the drugs, along with recent FDA-approval for others (e.g., Zepbound) to specifically treat obesity, employers seem more open to the idea of covering these drugs despite the current cost. According to the 2024 Large Employers’ Health Care Strategy and Plan Design Survey, 22 percent of employers covered off-label use in 2023. But over the next two years, nearly two-thirds (62 percent) expect to cover it for employees.

One reason employers may be more inclined to cover the drugs is due to the potential benefits they get from healthier workers. Today, obesity affects almost 42 percent of American adults, and is associated with a wide range of chronic health conditions, diseases, including type 2 diabetes and heart disease, arthritis, sleep apnea, and some types of cancers. Left untreated and unmanaged, obesity is estimated to increase U.S. healthcare spending by $170 billion annually, adding to health plan costs for employers.

Benefit from covering these drugs

With the increasing popularity and efficacy of these drugs, it’s not surprising that many workers now seek coverage from their employer-sponsored health plans. While the high cost may prevent employers from covering them, there is a potential to improve talent recruitment efforts and employee retention for those employers that do cover the drugs.

The Society of Human Resource Management reports that HR decision-makers feel it will create a better health insurance package overall for employees, as well as give a boost to overall employee satisfaction.

Employers that cover/plan to cover GLP-1 drugs (e.g. Wegovy):

In 2023 = 25 percent |  In 2024 = 43 percent

Source: Accolade

The important question to answer is: When choosing to cover these drugs, how can employers balance the added expenditure with the fierce pressure to keep the cost of health insurance down?

Contain costs of non-approved weight-loss drugs 

Require prior authorization

for certain medications to compel employees to obtain approval from their healthcare providers, and deter misuse, before your health plan covers these drugs.

Impose stricter requirements

so that employees (and their doctors) must provide proof that other medications or approaches did not control blood sugar or resulted in serious side effects.

Promote step therapy

to encourage employees to try less expensive weight loss treatments first before pursuing higher cost medications. For example, someone seeking a prescription for Wegovy might first try making lifestyle changes that include diet, exercise, hypnosis, or lower cost drugs approved for weight control.

Consider lifestyle modification programs

as a prerequisite for coverage. According to a recent survey, 22 percent of employers who cover FDA-approved weight-loss drugs require employees to participate in a lifestyle modification program in order to be eligible for the drugs.  

Place limits on coverage

either in dollar amount or length of treatment. Weight-loss drugs aren’t considered essential health benefits so employers can limit lifetime maximum benefits. In 2024, the Mayo Clinic medical plan, for instance, will impose a lifetime limit of $20,000 for weight loss medication coverage.

Explore alternatives

such as covering psychology-based weight loss programs, like Noom, to support weight loss. In some cases, these programs offer prescriptions for obesity drugs, like Wegovy, for approximately $120 per month, as well as cheaper weight loss medications that can help reduce food cravings.

Invest in wellness programs

that focus on weight management and mental health. Encourage employees to participate in fitness programs, nutritional counseling, and stress management to help reduce the need for off-label drug use.

Include counseling and support services

for personalized weight-loss coaching and related support in employee assistance programs to reinforce healthier lifestyles, eating habits, etc.

With the experience and access to create bespoke solutions that can enhance your acquisition, retention, and cost containment efforts, the team will work as an extension of your human resources team.


Tags in this resource

off-label ozempic pharmacy RX weight loss drug wellbeing
Related Insights

Stay in the know

Our experts monitor your industry and global events to provide meaningful insights and help break down what you need to know, potential impacts, and how you should respond.

Provide a Safe Working Environment
Preventing workplace violence Workplace violence is an unfortunate reality for many businesses, and it can take many forms, including physical...
Risk Mitigation
You’ve Decided to Repurpose Your Commercial Property – Now What?
Know and protect your evolving risk We’ve talked about the risks associated with repurposing your commercial property and how vital...
Navigating Coverages
Managing the Loss of Homeowners Insurance
Manage the potential loss of homeowners insurance A homeowner’s insurance policy helps provide financial security against damage to your home...
Management Liability
Instill Confidence with Thorough Due Diligence
Private Equity Insurance and Employee Benefits M&A Due Diligence Navigating the art of the deal As the economy continues to...
Strategy
Are Your Business Insurance & Employee Benefits Teams Talking? They Should Be
Build an effective insurance strategy with confidence Ensuring the long-term success and safety of your business means regularly managing multiple...
Let's make it possible

Partner with us to build solutions that align with your business, individual, or employee needs and open new possibilities for your future.

Connect with us