Diabetes drug Ozempic – the brand name for semaglutide – hit the weight-loss sector like a freight train, becoming the latest poster child for a booming GLP-1 anti-obesity medication (AOM) market that Goldman Sachs Research projects will grow by 16 times to $100 billion by 2030 – up from its current value of $6 billion. GLP-1s like Ozempic, Wegovy, and Saxenda hold great promise for the more than 1 billion adults and children worldwide who are living with obesity – while forcing health plans to confront a complex cost-benefit analysis and supporting processes when it comes to formulary management.

Several external market forces are driving the exploding popularity of AOMs, including shifting perceptions about obesity and viral social media campaigns touting their success. Also at play is emerging clinical research supporting weight management for obesity-related illnesses, in particular diabetes treatments focused on both controlling A1c levels and weight:

• The landmark SELECT study, released in September 2023, confirmed that Wegovy and other similar AOMs can prevent an array of cardiovascular complications, reducing the risk of heart attack, stroke or cardiovascular death by 20 percent compared to a placebo.
• A research letter in the New England Journal of Medicine reported that treatment with semaglutide may allow people newly diagnosed with Type 1 diabetes to significantly reduce or stop insulin injections. Three months into treatment with semaglutide, all the subjects were able to stop taking insulin with meals, and more than 65 percent were able to stop taking insulin entirely within six months.

Backed by this research, insurance plans are already providing an estimated 40 million Americans with access to AOMs – about 3 million more than the total number living with diabetes. This includes about 42 percent of employer-sponsored health plans, most of whom cover AOMs with prior authorization or reauthorization requirements. About 15 percent are considering adding GLP-1s to coverage.

This is just the tip of the iceberg, however. Higher availability and rising demand are intensifying pressure on health plans to increase coverage of AOMs, as evidenced by introduction of the Treat and Reduce Obesity Act that would authorize Part D coverage of medications used to treat obesity and/or manage weight loss in overweight individuals with co-morbidities. Supporting expanded coverage is clinical evidence suggesting that most high-risk Type 2 diabetes cases are caused by obesity, and that many individuals with obesity will develop Type 2 diabetes – and wind up being treated with a GLP-1 AOM.

Thus, the conundrum: is it better for health plans to cover GLP-1 AOMs to treat obesity and hopefully prevent it from developing into the more complex and costly Type 2 diabetes, or refuse coverage until Type 2 diabetes is diagnosed?

In reality, the market has already spoken. High consumer demand means taking steps to manage coverage of GLP-1 AOMs to positively impact member and clinician satisfaction – two critical performance measures. The growing evidence of semaglutide’s clinical impact on costly illnesses like cardiovascular and stroke also points to lower utilization rates and therefore care costs.
As such, health plans should implement strategies to mitigate the financial impact of doing so. There are five actions they can take to set AOM coverage up for success. These are:

1. Expand analytics capabilities to monitor the efficacy of AOMs as established by randomized controlled trial (RCT) data and other real-world evidence.
2. Incorporate cost-share management into plan designs.
3. Deploy advanced AI and automation tools to enhance management of prior authorization and grievance and appeals.
4. Implement AI-enabled tools to enhance and expand medication adherence outreach to support member compliance.
5. Leverage predictive analytics capabilities to identify the at-risk groups who would benefit most from pre-Type 2 coverage.

The AOM market boom shows no sign of slowing. The rapid expansion of research demonstrating their efficacy and linking their use to management of several costly – and potentially deadly – conditions will continue to fuel demand. Health plans simply cannot afford to prolong their supporting investments, or they risk being crushed by an exodus of enrollees to plans that do reimburse for AOMs.

The key to success is a clear structure and process for coverage and continuously monitoring readily available data to evaluate the medication’s efficacy among the plan’s patient population, weigh costs against benefits, and alert when adjustments may be needed for optimal outcomes.