Large employers are bracing for a significant rise in healthcare costs, anticipating a 50% increase by 2025 compared to 2017 levels. A major contributor to this surge is expected to be prescription drug spending, particularly on GLP-1 medications. These drugs, which have garnered attention for their use in weight management and reducing cardiovascular risks, are proving costly, leading to concerns among employers.
A survey conducted by the Business Group on Health (BGH), which included responses from 125 large employers, revealed that 56% of them identified GLP-1 drugs as having a “very great” or “great” impact on their healthcare costs. Moreover, 70% of employers expressed significant concern over the long-term cost implications and appropriate use of these medications, which are becoming increasingly popular but remain expensive.
GLP-1 drugs have been recently approved for weight management and cardiovascular risk reduction, adding to their use in diabetes treatment. However, due to their high costs, many employers have been hesitant to include these drugs in their health plans. The survey found that while almost all employers covered GLP-1 drugs for diabetes, only 67% covered them for obesity, and a mere 34% provided coverage for cardiovascular conditions.
To manage the use of GLP-1 drugs, 87% of employers have implemented prior authorization requirements, and over half require plan members to meet specific criteria, such as participating in weight management programs or having certain comorbidities. There’s also growing concern about the quality of GLP-1 drugs obtained through direct-to-consumer platforms and compounding pharmacies, which may lack proper clinician oversight. Employers are wary of these sources and are not encouraging their use, although they acknowledge that some employees may still turn to them.
In response, 24% of employers have started requiring that GLP-1 drugs be acquired through specific physicians or programs to ensure proper oversight and care.
While GLP-1 drugs are a notable factor driving up costs, they are not the only one. Cancer remains the leading cost-driving condition for the third consecutive year, with 72% of employers reporting an increase in cancer cases among their patient populations. Additionally, 87% of employers plan to offer additional cancer screenings beyond standard recommendations, reflecting the growing concern over rising cancer prevalence, especially among younger individuals.
Overall, healthcare cost increases remain a pressing issue for employers, with many projecting nearly an 8% hike in 2025 before any changes to plan designs. This trend underscores the ongoing challenge of managing rising healthcare expenses in the face of growing demand for costly treatments like GLP-1 drugs.
