Should we cover GLP-1 drugs for weight loss?

GLP-1 drugs work, and demand is enormous. Covering them for diabetes is standard. Covering them for weight loss is a real budget decision, and every employer is being forced to make it.

Here are the four options I usually walk clients through:

Don't cover for weight loss. Cheapest today. Expect employee pushback and questions from recruits.
Cover with guardrails. BMI thresholds, prior authorization, required participation in a lifestyle program, and reauthorization based on results.
Carve out to a specialty program. A separate vendor manages eligibility, coaching, and sourcing, sometimes at a negotiated price.
Cover broadly. Best for employees, but the cost can be significant and it needs to be budgeted honestly.

There's no wrong answer here, only an unmanaged one. The mistake I see is a plan that never actually decided, so the policy is whatever the PBM's default happens to be and the cost shows up as a surprise in the pharmacy line.

Pricing and coverage rules in this area are changing fast, so whatever you decide, revisit it every year. Put the policy in writing, know what it costs you per month, and tell employees clearly what is covered and why.

Questions to ask

What is our written GLP-1 coverage policy today?
What is it costing us per month, and how fast is that growing?
What share of our pharmacy spend is specialty, and who is dispensing it?

How do PBMs make money, and are we actually getting our rebates?

PBMs earn money from manufacturer rebates, spread pricing, and fees, much of which you never see. Most rebate contracts guarantee a fixed dollar amount per brand script, not a percentage of what the PBM collects, and some rebates are now paid to PBM-owned aggregators as "administrative fees." The first page to read in any PBM contract is the definition of "rebate."

How do underwriters actually price our renewal?

Your renewal is a number the carrier decides, not one it simply calculates. The underwriter projects your claims, adds trend, blends in a manual rate based on credibility, applies pooling charges for large claims, then adds retention for admin, taxes, commissions, risk, and profit. Every one of those inputs has a range, which is why two carriers can look at the same data and come back 15 percent apart.

When should we start working on our health plan renewal?

Five months or more before the effective date. Requests for quotes typically go out three to four months before renewal for fully insured groups and four to five months out for self-funded and captive groups, because stop loss quotes and lasers depend on current large claim detail. Most renewals fail because they start 60 days out.