Health care costs are projected to increase substantially this year. According to industry surveys and reports, employers anticipate health care costs to increase by 7%-8% in 2025. As a result, employer-sponsored health care plans will continue to cost more per employee, impacting employers and employees alike.
With glucagon-like peptide-1 (GLP-1) drugs gaining popularity and being used by more plan participants, they are a key driver of rising health care costs. This Health Care Cost Spotlight article focuses on GLP-1s and how they’re impacting health care costs this year and beyond.
The Growing Demand for GLP-1s
The first GLP-1 medication was approved by the U.S. Food and Drug Administration (FDA) in 2005 for Type 2 diabetes, but clinical trials revealed that patients experienced significant weight loss, giving way to the first GLP-1 approved for weight loss in 2014. Innovation continued, and GLP-1 use has risen to prominence as a weight loss tool in recent years.
Obesity is a disease influenced by behavior, medication use, diet, family history, genetics, and systemic factors like food insecurity and inactivity. It’s linked to other conditions like diabetes, heart disease, and cancer. Over 2 in 5 adults in the U.S. have obesity. While weight loss is possible through lifestyle changes, many turn to medication.
A KFF poll showed 1 in 8 Americans have used a GLP-1, and 6% are currently taking one. J.P. Morgan predicts this number could grow to 9% by 2030.
Popular GLP-1s include Mounjaro, Ozempic, Rybelsus (for diabetes), and Zepbound, Wegovy (for obesity). Ozempic is also now approved to help prevent cardiovascular issues in people with chronic kidney disease. These drugs may eventually treat Alzheimer’s, heart disease, and sleep apnea.
More GLP-1s are expected by 2026. Since they suppress appetite, they also risk causing muscle loss. New drugs aim to prevent that. Over 100 new drugs are being tested for obesity treatment.
Ozempic, Rybelsus, and Wegovy were included in Medicare’s Drug Price Negotiation Program. These negotiations will continue through 2025 and may affect access, supply, and cost trends.
The Cost of GLP-1s
On average, GLP-1 drugs cost around $1,000 per month per user. Employers are concerned about the long-term costs of covering these drugs.
According to a Business Group on Health (BGH) survey, large employers expect costs to rise 7.8% in 2025. GLP-1s were cited by 57% of respondents as a major contributor. Other concerns include expensive gene therapies and general pharmacy costs.
Cost-mitigation Strategies for Employers
Although many employers haven’t historically covered GLP-1s for weight loss, demand and public health trends are changing this. Coverage still varies by company size and purpose of use (e.g., diabetes vs. obesity).
- Choose whether to cover GLP-1s for obesity or only for Type 2 diabetes.
- Raise the BMI threshold (e.g., require 30 BMI or 27 with other conditions).
- Implement prior authorization, step therapy, or other controls before approval.
- Pair drug coverage with wellness programs promoting exercise and healthy eating.
- Use cost-saving programs such as rebates, coupons, and pharmacy networks.
- Adjust cost-sharing structures (e.g., raise deductibles or copays).
Employers can choose strategies that help manage costs while supporting employees’ health. Done thoughtfully, these decisions can benefit both the bottom line and workforce wellbeing.
Summary
GLP-1 medications are a growing driver of U.S. health care costs, especially as employees push for coverage. Given their high cost and long-term use, employers are weighing how to respond. Staying current with trends and clinical developments can help employers make smart, sustainable decisions.
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