Weight Loss Medication Coverage, Big PBMs Drive Up Cost Concerns for Plan Sponsors

More than half (51%) of large U.S. employers are likely to increase health care benefit cost sharing with their employees next year as the use of new weight-loss drugs surges, according to Mercer’s Survey on Health Benefits Strategies for 2026.

Yet when surveyed about their 2025 intentions to add coverage of glucagon-like peptide medications, which have become popular by helping patients lose weight, employers with at least 500 workers were more likely to say they would add coverage in 2025 than drop it.

“Employers [are] between a rock and a hard place,” says Paul Fronstin, director of health benefits research at the Employee Benefit Research Institute. “They want to do the right thing, but they are also looking to match their budget.”

Costs on the Rise

Employers’ concerns about the cost of prescription drugs reflect employees’ interests in using those same medications. Seventy-seven percent of employers surveyed by Mercer said managing GLP-1 costs was extremely or very important, raising an issue likely to continue for years, as interest persists or increases.

While the average medical plan cost per employee rose by 5% among large employers in 2024, prescription drug costs rose 8%, Mercer found.

“New … therapies and other specialty drugs are making a big difference in people’s lives—and are also extremely expensive,” the research stated. “As employers were starting to grapple with this cost risk, they were suddenly faced with exponential growth in the utilization of costly GLP-1 medications that are being used to treat obesity.”

GLP-1 medications were originally approved to treat Type 2 diabetes. However, more than 2% of Americans were taking the drug to manage overweight or obesity in 2024—up nearly 600% over six years, according to a May report from nonprofit health data provider FAIR Health.

While an estimated 40% of the U.S. population is obese, according to the Centers for Disease Control, Mercer found only 2-5% are being treated with a GLP-1 medication. The size of the potentially eligible population suggests usage could vastly expand.

 What’s Driving Up Costs?

“There are a number of factors that drive up the cost,” says Susan Cantrell, CEO of the Academy of Managed Care Pharmacy. “When you look at those drugs, they’re complex to manufacture; of course, it costs a lot to bring a new product to market; [and] some of the products are in auto-inject[ors]. … That adds convenience, but that adds expense as well.”

Cantrell says a big part of what could drive up costs is not only the drugs’ expenses, but the “gigantic population that could potentially benefit” from the products. Some drug manufacturers have offered patients lower-price single dose bottles, and weight-loss drugs are on the list for Medicare price negotiation, Cantrell explains. But she says the industry is still trying to figure out the long-term impacts of these options on medication prices.

“I’m going to venture to guess that employers get significant demand from their employees to cover these,” Cantrell says. “But at the same time, is it affordable? That’s the conundrum that [employers] face right now.”

Interest Is Up, Knowledge Is Lacking

“Employers tend to address cost in terms of what the enrollee sees—there’s more [addressed] through plan design than through what’s covered,” says EBRI’s Fronstin. “Once something is covered, it’s hard to take it away.”

According to health policy organization KFF’s 2024 Employer Health Benefits Survey, only 18% of employers with at least 200 employees cover GLP-1s when used primarily for weight loss. But an EBRI report showed that employees’ belief that coverage should be offered is abounding—despite a knowledge gap. EBRI found that 51% of private health plan participants surveyed were unsure whether their health plan provided coverage for GLP-1s at all. Yet nearly two-thirds (64%) of respondents thought they should be covered.

Fronstin notes that some of the 51% who were unsure might have answered that way simply because they did not need the drug.

“[Employers] are going to see what they have to do to attract the kind of employees that they want to attract,” Fronstin says. “They offer health benefits voluntarily to be competitive in a labor market.”

He says employers considering covering GLP-1s might review factors such as how long an employee will stay on a weight-loss medication and whether improvements in their health that stem from weight loss will drive down other health care costs.

Cantrell agrees, saying the “challenge is persistence with therapy.” There are a “relatively high percentage of patients who stop taking the drug,” she says, and when they do, excess weight frequently comes back. But right now, there is little understanding of why so many people stop taking the drug, Cantrell explains.

The Fight Against PBMs

At the same time GLP-1 prices and usage tick up, some employers and politicians have been calling out the companies that manage prescription drug benefits for health insurers, employers and other payers: pharmacy benefit managers.

Serving as middlemen between drug companies and consumers, PBMs negotiate volume discounts and fees with manufacturers; generate lists of medications that are covered by insurance—known as formularies—and reimburse pharmacies for prescriptions they distribute. The pharmacy companies pass those discounts on to consumers, but they may retain some portion as profits.

Earlier this year, Arkansas Governor Sarah Huckabee Sanders signed legislation banning Cigna, CVS and UnitedHealth—who operate the three largest PBMs, which control 80% of the market—from owning pharmacies in the state. Last Wednesday, a federal judge temporarily blocked that law.

Cantrell calls the now-halted law “concerning.”

“CVS announced right after the act was signed into law that they would close all their pharmacies in the state of Arkansas as a result,” Cantrell says. “So, there are serious implications for patient access.

Arkansas was not the first state to take on PBMs, and it likely will not be the last. At least 15 states are considering measures allowing patients to choose where and how to receive their prescription drugs, according to the National Conference of State Legislatures. Cantrell says Louisiana had a similar bill to Arkansas that “came down to the wire,” but so far, Arkansas is the only one that has passed a ban on PBMs owning pharmacies.

Cantrell says the large PBMs benefit consumers by using their purchasing power to negotiate discounts that can be passed on to patients to keep costs low, as well as by offering an expansive network of pharmacies.

On the other hand, Cantrell says critics of PBMs might say smaller PBMs that have emerged over time have not been able to compete.

The Federal Push on Pricing

Those critics, since last year at least, include the federal government. Under the administration of former President Joe Biden, the Federal Trade Commission issued a pair of reports critical of PBM pricing practices and filed an administrative lawsuit against the three largest PBMs.

As part of efforts to curtail prescription drug pricing, President Donald Trump sent letters to 17 pharmaceutical company CEOs on July 31, demanding they reduce drug prices within 60 days. Addressed to the CEOs of Novo Nordisk—which makes Ozempic and Wegovy—and other weight loss medication manufacturers, the letters included a deadline of September 29 for the companies to cut drug prices for Medicare and Medicaid recipients to the lowest rates they sell to any developed nation.

“Domestic [most-favored nation] pricing will require you, and all manufacturers, to negotiate harder with foreign freeloading nations,” Trump wrote in the letter.

Meanwhile, the Trump administration is planning a five-year experiment to cover weight-loss drugs under Medicare and Medicaid. Under the proposed plan, state Medicaid programs and Medicare Part D insurance plans would be able to voluntarily choose to cover the medications Ozempic, Wegovy, Mounjaro and Zepbound for patients for “weight management purposes,” according to Centers for Medicare and Medicaid Services documents obtained by the Washington Post, the publication reported.

Employers Explore New Paths

In conjunction with state and federal efforts, employers are exploring alternatives to PBMs.

Mercer’s health benefit strategies report found that 34% of employers surveyed are evaluating new and emerging PBMs. Dissatisfaction with the major PBMs has “created new opportunities for entrants,” and more than 50 new PBMs have emerged in recent years, the report stated.

The Consolidated Appropriations Act of 2021 required plan sponsors to attest that the fees they pay for health care plans are fair and reasonable. As a result, it is important that plan sponsors apply a fiduciary process when evaluating their health plans, including pharmacy benefit managers, as well as remain aware of any pending litigation involving the providers.

The same percentage of respondents said they were evaluating the benefits of requiring PBMs to disclose all enterprise revenue. This would drive retail, mail order and specialty pharmacies, among others, to provide transparency into how much employers pay PBMs for their services.

“Perhaps the biggest surprise is that 39% of employers say they are not considering a change in how they manage their pharmacy benefits,” the report stated. “While other concerns may take priority in any one year, given how dynamic the pharmacy landscape is right now, it’s important not to go too long before refocusing on this critical area.”