GLP-1 medications like Ozempic, Wegovy, and Zepbound are often described as cost-effective, yet many insurance plans continue to restrict access. Researchers at the University of Mississippi are investigating the financial and practical reasons behind these limits and the consequences for patients.
A recent analysis from the Institute for Clinical and Economic Review, an independent nonprofit that assesses the value of medical treatments, concluded that GLP-1 drugs are cost-effective. The health improvements they provide are considered substantial enough to justify their price.
But a treatment can be cost-effective without being cost-saving for insurers. In a study published in the Journal of Managed Care and Specialty Pharmacy, Sujith Ramachandran, associate professor of pharmacy administration, explained that the impact of these drugs on a budget is still massive.
“The ICER report shows that GLP-1s, at the cost that they are currently being sold, provide tremendous value to society,” he said. “But the impact they create on the budget is still massive.”
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This happens because the patient population eligible for this medication is so large. Even if the medications themselves represent good value for society, that does not mean the system can absorb the impact of how many individuals would use them. According to the Centers for Disease Control and Prevention, about 40% of Americans have obesity. If even a relatively small share of that population began GLP-1 treatment, insurance companies could be responsible for billions of dollars in new spending.
“ICER has a budget impact threshold that estimates whether the uptake of a drug can lead to a budget impact concern,” he said. “The threshold for this year is $821 million.”
GLP-1s blow way past that threshold, even at lower numbers of uptake.
Why Coverage Limits Persist
Supporters of broader GLP-1 coverage often argue that treating obesity earlier could prevent expensive health problems and reduce medical spending over time. Ramachandran said current evidence has not yet demonstrated that those expected savings actually occur.
“We expect that if we address the obesity issue in this country, then in theory, it should create savings down the road for cardiovascular conditions, liver conditions and kidney conditions,” he said. “But does that mean it actually produces savings? Well, the existing data do not show that.”
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Many patients stop taking GLP-1 drugs within the first year. Common reasons include the cost of treatment, reaching a target weight, and gastrointestinal side effects. After discontinuing the medication, many people regain some or all of the weight they lost.
Ramachandran said insurers are more likely to see lasting financial benefits if patients can maintain their weight loss and preserve the related reduction in obesity-associated disease risks. Achieving that may require coverage that extends beyond the six months or one year offered by many insurance plans. It may also require providing the same lifestyle support used in clinical trials.
The first thing to remember is that all of the clinical trials, GLP-1s were not tested against no treatment; they were tested against lifestyle management interventions. It was not lifestyle management versus GLP-1; it’s lifestyle management versus lifestyle management plus GLP-1.
That distinction means patients may need a broader support system rather than medication alone. You have to provide them access to a registered dietitian, you have to provide them access to a gym membership, you have to provide them access to a fitness instructor or whatever network of services it is that you can provide to make sure that the change is in a lifestyle and not just in taking a medication once a week.
When insurance does not cover GLP-1 medications, less expensive compounded products may appear to offer a more affordable option. However, researchers warn that these alternatives can carry significant risks.
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Compounded GLP-1 drugs are not subjected to the same rigorous review process as medications approved by the U.S. Food and Drug Administration, according to Liang-Yuan Lin, an Ole Miss doctoral candidate in pharmacy administration who studies compounded drug pharmacies.
“The FDA has already issued warning letters about compounded GLP-1s,” she said. “The FDA has found websites selling unapproved ingredients or even the wrong ingredients, which is terrifying for patients.”
Even if they’re listing the right ingredients, you don’t know where these ingredients are from or how they’ve been transported or handled, which could be really dangerous.
Lin and Ramachandran advise patients to speak with a physician before beginning a GLP-1 medication and to remain under medical supervision while using it. A doctor can help manage side effects, monitor safety, and confirm that the medication is FDA-approved.
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