Employers Debate the Costs and Benefits of Covering Obesity Drugs

While employee benefits are intertwined with health and wellness strategies, companies are reported to be taking a substantial financial loss if they cover obesity drugs like Novo Nordisk’s Wegovy and Eli Lilly & Co.’s Zepbound.  

A report released Wednesday by JPMorgan Chase & Co.’s Morgan health unit, as reported by Market Watch, reveals how employers will spend “much more then they’ll save” and that this approach to employee health has a potential long-term negative impact on the workforce and workplace culture because it pits the consumer’s interests against their employers. 

This is mainly because employers are grappling with the high costs of covering obesity drugs against their potential health savings. While these drugs offer considerable health advantages for consumers, the immediate financial impact on employers is reported to be substantial.  

According to a report published by Business Insider, patients and doctors continue to put pressure on Medicare, health insurers, employers, and states to pay for drugs in this category, but many are not budging due to their high price tag — which is significant compared to other countries. In fact, CNBC reports that drugs like Ozempic and Wegovy are significantly marked up in the United States, listed at around $1,000 U.S., but the list price is found at a fraction of that in countries including Germany, Sweden, France, and Japan. 

MarketWatch reports that despite these financial concerns, the trend towards companies covering these drugs is actually growing. About 40% of large employers are reported to currently cover GLP-1 drugs for obesity, according to the JP Morgan’s report. However, many employers are also implementing strategies to limit their use. According to MarketWatch, this includes limiting the quantity or duration of coverage and requiring workers to have an obesity diagnosis before coverage can officially start. This approach reveals a controversial balancing act between providing employee health benefits and managing high healthcare costs. 

The potential of these drugs to improve an individual’s long-term health is notable. According to a report published by Business Insider, research found that Wegovy reduced the risk of heart attack, stroke, and death due to cardiovascular disease by 20% in an international, multi-year study sponsored by Novo Nordisk. As more research emerges, more employers may view these drugs as a worthwhile investment in their workforce’s health, potentially leading to a healthier, more productive workforce overall. 

The debate over obesity drug coverage is part of a larger conversation about the role of employers in healthcare. As companies navigate these decisions, they are setting precedents for how health benefits are perceived and valued in the modern workplace. 

The inclusion of obesity drugs in employer healthcare plans is a complex issue with far-reaching implications for the workforce. It coincides with a growing recognition of the importance of employee health and wellbeing, and how those factors influence workplace productivity, culture, and retention. Drug coverage of obesity and weight-loss drugs are likely to be a key area of development in employee benefits in the coming years.