Ozempic: Weighing Coverage Decisions

HR directors at large companies have fielded hundreds of requests: Will the company’s health-insurance plan begin covering weight loss medications like Wegovy? Soon? And which employees will qualify?

Since weight-loss-causing medications like Mounjaro and Ozempic have gained mainstream popularity in the last year, HR executives have found themselves answering questions usually fielded by medical professionals. Firms are caught in the middle, between health insurers deciding how to cover expensive drugs and employees who want access. This is precisely where employers don’t want to be. “There are ethical, financial, and clinical decisions to be made. You really don’t want employers in the middle of that trifecta,” says Ronald Seifert, workforce reward and benefits leader for North America at Korn Ferry.

According to one survey by the health firm Accolade, 43% of organizations say they will cover weight-loss drugs this year, up from 25% that already do. Certainly, the need is there: 41% of Americans are obese, according to the CDC, and experts say the new weight-loss drugs would go a long way toward reducing a host of weight-related ailments. But with companies already facing a 5% to 8% jump in healthcare costs this year, coverage policies for weight loss are the Wild West. Some firms understand the new landscape, others not so much. “It just depends on which policy you have and what your company has in its insurance agreements,” says healthcare expert Kae Robertson, senior client partner at Korn Ferry

Coverage can also vary from firm to firm, with denials not uncommon. For the few weight-loss drugs that have been FDA-approved for obesity treatment (more are approved for ailments like diabetes), many plans require members to get individual approval, including patients who meet body mass index requirements.

In most cases, firms and health insurers forecast their medical costs in advance, so the suddenly popular weight-loss drugs present an enormous financial risk, especially in the US, where drugs are typically more costly than in other countries. “It could really capsize a health plan’s cost structure,” says Brian Joyce, senior client partner in the Global Healthcare Services practice at Korn Ferry. Current pricing for 2024 health plans was completed by last summer, he says: “They didn’t bake it into their costs, and it would hurt their bottom line.”

Joyce says that from health insurers’ perspective, the challenge is to find the drug’s value proposition. For example, for an obese employee who also suffers from comorbidities, such as cardiovascular disease, an outlay of many thousands for a weight-loss drug would be cheaper than the future costs of treating ensuing obesity-related health problems, such as Type 2 diabetes—for which the equivalent medications are FDA approved. “You’ll end up paying for the drug, anyway,” says Robertson.

Long-term research showing effects of adverse outcomes does not yet exist; and the data that’s most relevant to employers—on how these weight-loss medications ultimately impact workplace engagement and productivity—may take decades to appear. “You might see not just improved mental health, but someone feeling better, and mentally more engaged in their work environment,” says Greg Button, president of global healthcare services at Korn Ferry.

Still, experts point out that taking on the cost of the drugs may mean tighter coverage or controversial denials of other drugs and treatments. So experts suggest companies should keep discussions about coverage open and flowing. “It should be something you’re asking insurers about, and inquiring how they’re approaching it,” says Button.

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