Injectable glucagon-like peptide-1 agonists, or GLP-1s, were first approved as diabetes medications 20 years ago. They’ve since become popular as weight loss drugs. Taken in conjunction with an appropriate diet and exercise regimen, GLP-1s are effective at lowering a person’s weight. Nonetheless, insurers in the commercial and public sectors have been reluctant to reimburse them as obesity medications. Policy analysts cite different reasons for payers holding back, including the drugs’ impact on pharmaceutical budgets coupled with the lack of short-term cost savings associated with their use. Further compounding the problem is the absence of sufficient patient persistence on the drugs: A relatively large portion of patients discontinue these medications within one year, with numbers increasing by the end of years two and three.
Despite high demand for the new generation of weight loss drugs, they currently face numerous commercial insurance coverage restrictions. According to GoodRx, a company that operates a telemedicine platform that tracks drug prices and provides drug coupons for discounts, the number of people with no commercial insurance coverage for Zepbound (tirzepatide) increased by over 180% in 2025. For those who have insurance coverage, more than nine in ten must meet additional requirements such as prior authorization. Though coverage for Wegovy (semaglutide) is generally better than for Zepbound this year, 88% of people getting Wegovy through their insurer still face hurdles, including prior authorization and required protocols in which cheaper treatments must be tried first prior to gaining access.
And in the latest survey posted by the International Foundation of Employee Benefit Plans in May, 55% of employers said they provide coverage of GLP-1s for diabetes only, while only 36% provide coverage for both diabetes and weight loss. And of those employers currently offering GLP-1 drug coverage solely for diabetes, just 17% are considering reimbursement of drugs for obesity.
For insurers, the problem with GLP-1s is their large budgetary impact, sometimes referred to as financial exposure, should they cover them. GLP-1s for weight loss account for more than 10% of annual prescription drug claims for employer-based plans that reimburse them, according to recent data. Payers don’t consider this sustainable, as it crowds out their ability to cover drugs in other therapeutic categories. In addition, they’re concerned about having to substantially raise enrollee premiums.
And what further troubles insurers is large-scale studies show that GLP-1s don’t lead to medical cost savings, at least not in the short term. To illustrate, a recent study of 23,000 people on semaglutide-based products across multiple payer types did not find a decline in medical spending for those who were prescribed the medications. In fact, it increased. For those patients initiated on the GLP-1s, healthcare expenditures rose, with inpatient costs accounting for the largest share. This was observed for patients with and without diabetes.
The good news from the study is that patients experienced improvements in blood pressure, total cholesterol level and HbA1c level, underscoring the products’ association with prevention of cardiovascular disease risks. They also lost weight, however, the observed reductions in routine clinical practice were smaller than those reported in clinical trials.
The research findings highlight the absence of a connection between clinical benefits and short-term cost savings, with the study authors concluding: “Our 24-month analysis did not demonstrate cost savings, in contrast to industry-sponsored models that project long-term savings (eg, over ≥10 years) based on trial-derived effectiveness.”
There have been fewer studies focused on the more recently approved tirzepatide-based drug Zepbound. Nevertheless, the evidence points in the same direction as for Wegovy: Despite offering robust clinical benefits, in the short-term both products are not cost-saving due mainly to their high cost.
For insurers, the elusiveness of short-term savings matter, because so many enrollees “churn” through different health insurers over time. Payers aren’t necessarily incentivized to invest in the longer-term cost savings found in industry-funded models.
Net prices of branded GLP-1s would have to come down further in order for them to be cost-saving within, say, a two-year time period. Availability of cheaper, generic versions is on the horizon. Moreover, as part of the Inflation Reduction Act’s drug price negotiation program, the prices of both Ozempic (semaglutide) and Wegovy are currently being negotiated between the Centers for Medicare and Medicaid Services and the pharmaceutical giant, Novo Nordisk. Their so-called maximum fair prices will be publicly posted by early 2026 and implemented in 2027. Though applicable to Medicare, these prices could also serve as benchmarks for payer negotiations in Medicaid and the commercial market.
Nonetheless, even with lower net prices, medical cost savings would be predicated on improvement of levels of persistence on treatment regimens, along with more intensive nutritional support and lifestyle management (diet and exercise).
There’s some encouraging news on this front. The most recent Prime Therapeutics study on persistence points to patients increasingly staying on GLP-1s for at least a year. While just over 30% of people on Wegovy made it on their medication to the one-year mark in 2021, the year it was approved for weight loss, that figure had nearly doubled by 2024. Zepbound, approved in 2023, had similar persistence rates. Better persistence could change payers’ calculations, as they’d be getting an improved return on their investment with fewer patients dropping out.
A fresh analysis of the clinical and financial implications of comprehensive coverage in Medicare of GLP-1s for all current FDA indications (type 2 diabetes, obesity, heart disease and metabolic-associated steatohepatitis) offers some hope for long-term cost savings. Researchers estimate that if Medicare were to lift the prohibition on coverage of GLP-1s for weight loss alone and institute broad coverage of semaglutide-based products, this could prevent nearly 39,000 cardiovascular events and the program could save over $700 million in net costs over ten years. These benefits are driven in large part by type 2 diabetes outcomes, where cost offsets from fewer hospitalizations and complications outweigh drug costs.
The study also demonstrated clinical benefits for semaglutide-based products used strictly in obesity care, but the model projects added net costs for their use in weight loss alone.
One way to circumvent the problem of lack of cost savings is to better target reimbursement by stratifying subgroups of obese patients into those expected to benefit the most versus those for whom the return isn’t as good. It’s been demonstrated, for example, that greater savings can be attained for those with comparatively higher body mass indices. If policymakers want to expand GLP-1 coverage to include the obesity indication in Medicare, Medicaid, or the commercial insurance sector, they’ll need a strategy for managing utilization and targeting populations most likely to benefit. This in turn could yield the hitherto elusive cost savings.
