GLP-1 coverage costs pressure employers and Medicare plans in 2026

Even as evidence accumulates about the efficacy of GLP-1 drugs, concerns surrounding insurance coverage of the products remain unresolved.

Both employers and insurers are trying to navigate the dichotomy between clinical benefits and potentially burdensome costs.

 “Against the backdrop of anticipated double-digit healthcare cost increases, fueled to a large degree by GLP-1s and overall prescription drug costs, companies cannot ignore the reality that GLP-1s have significant implications for healthcare budgets — and overall affordability,” Ellen Kelsay, president and CEO of the Business Group on Health, which represents the health policy interests of large employers, said in a May 5 news release.

GLP-1 spending growth leads to coverage uncertainty

Evidence increasingly suggests GLP-1s are effective not only for weight loss and glycemic control but also in areas such as cardiovascular and kidney health.

Clinical questions tend to focus on long-term maintenance after stopping the therapy, but policy and spending issues arguably are bigger tripping points. National GLP-1 spending rose by more than 500% between 2018 and 2023, from $13.7 billion to $71.7 billion. The drugs are estimated to account for 14% of all prescription drug spending in 2026, not counting direct-to-consumer sales.

Longer-term healthcare cost implications are more promising. In a report examining claims data from 192,000 GLP-1 users in comparison with nonusers, the global professional services firm Aon found that users had a slower increase in medical cost growth over an 18-month period after beginning a GLP-1 regimen: 3% for users of Ozempic and Mounjaro, compared with 9% for a control group.

Nonetheless, “overall costs for GLP-1 users remain higher than those for non-users, largely due to the expense of the medication itself,” the report states.

Key to changing that trend will be reducing the cost of GLP-1s, which seems feasible “with direct-to-consumer programs, innovative pricing models and the approval of oral GLP-1 medications, all likely to influence market dynamics over the next few years,” the report states.

Employers are reassessing GLP-1 insurance coverage

Until costs come down, healthcare purchasers face challenges.

The Business Group on Health surveyed 105 large employers in February and March and reported this month that while two-thirds cover GLP-1s for weight management, that share likely will fall in 2027. Of that group, 72% intended to maintain coverage in 2027, while 10% did not expect to do so and 18% were unsure.

“Companies that do not cover GLP-1s for weight management today are unlikely to add coverage in the future,” according to the survey report.

Although “more than half of employers that cover GLP-1s for weight management expect the expensive medications to yield significant clinical benefits, few have yet seen evidence (such as a reduction in obesity rates and fewer employees needing bariatric surgery) within their aggregated claims,” the report states.

Utilization management strategies on the part of employers include:

• Validating clinical eligibility via objective biometric data
• Requiring participation in a weight management program to receive coverage
• Limiting prescriptions to certain providers
• Excluding certain medications from the formulary

Issues pertaining to coverage could intensify with the ongoing introduction of oral GLP-1 medications. Nearly nine in 10 (87%) large employers anticipate rising demand, and only 9% foresee a drop in price.

Employee confusion creates access and adherence challenges

According to another survey, confusion among employees is prevalent regarding coverage terms. Half of 2,000 consumers surveyed by the Employee Benefit Research Institute (EBRI) did not know whether their employer covered GLP-1s. Of those who said such coverage was available, only four in 10 definitively had access for both diabetes and obesity.

Of the surveyed consumers who reported using GLP-1 drugs, 35% said they had stopped taking the medications.

“Among them, many consumers reported that cost concerns played a central role in their experience with GLP-1 medications,” the survey report states. Specifically, 40% stopped taking the drug because of affordability.

“Taken together, the findings suggest that while interest in and support for GLP-1 medications are high, affordability remains a significant barrier shaping access and use among privately insured adults,” according to the report.

The EBRI survey was conducted with funding support from major health insurers.

Insurer trepidation stymies a proposed CMS model

Insurer ambivalence about covering GLP-1s was seen in the recent fate of a payment model proposed by CMS to improve the affordability of those products in Medicare and Medicaid.

The Better Approaches to Lifestyle and Nutrition for Comprehensive hEalth (BALANCE) Model was intended to bring down out-of-pocket costs by authorizing CMS to negotiate directly with manufacturers on behalf of Medicare Part D plans and state Medicaid agencies.

Although the model is proceeding in Medicaid, hesitation to participate among Part D insurers led the model to be postponed indefinitely in Medicare. Some of the concerns entailed questions about whether the negotiated prices would be enough of a discount to offset the costs of high GLP-1 utilization. The insurers said they needed more data on the potential uptake among nearly 14 million potentially eligible Medicare beneficiaries.

CMS’s establishes the Medicare GLP-1 Bridge

CMS recently announced an interim accommodation for Medicare beneficiaries. Starting July 1, enrollees in Part D plans and Medicare Advantage (MA) plans that include prescription drug coverage will be able to buy GLP-1s for $50 per month in what CMS is calling “a time-limited demonstration.”

As part of the program, which is called the Medicare GLP-1 Bridge and is scheduled to run for 18 months, CMS will provide centralized processing for claims adjudication and pharmacy payment through Humana.

“This structure allows CMS to expand access while working closely with providers, pharmacies and other partners to support a consistent and coordinated experience for patients,” according to a news release.

CMS notes that Part D plan sponsors will not bear risk under the program. Participating manufacturers will receive $245 per monthly supply of GLP-1s.

Prior authorization processes will apply, CMS notes. Beneficiary criteria include having a body mass index above a certain threshold, the specifics of which depend on the presence of comorbid conditions.

One point that will have to be clarified going into 2027 is the intersection of the Bridge Program with the Medicare-negotiated prices for Ozempic, Rybelsus and Wegovy under the Inflation Reduction Act, CMS acknowledged.