The runaway utilization of GLP-1 medications was already a top-five concern for 80% of managed care executives at the start of the year. So in April, when the Trump administration reversed a Biden-era proposal that would have allowed Medicare to cover GLP-1s for obesity, many payers exhaled a sigh of relief.
The reprieve may not last. Another policy reversal could open access to GLP-1s for 3.4 million Medicare members and 4 million Medicaid recipients. And with GLP-1 spend already having increased by 500% between 2018 and 2023, the pressure is on for health system leaders to create utilization strategies that balance financial exposure with member satisfaction.
Here’s a look at what’s driving the predicament, and what Medicare plans can do now to stay ahead.
An unexpected onslaught
Understanding today’s challenge requires looking back. Liraglutide (Victoza) was the first daily FDA-approved injectable GLP-1 in 2010 for type 2 diabetes. It delivered impressive results in glycemic control — and an unexpected side effect: weight loss. In 2014, the FDA approved Saxenda (liraglutide) as the first GLP-1 specifically for weight loss. As newer products came to the market with convenient weekly dosing, the public caught on quickly, and off-label demand for weight loss skyrocketed, overwhelming supply.
Wegovy, another therapy using semaglutide as its active ingredient, was FDA-approved in 2021 to treat weight loss. Two years later, tirzepatide (Zepbound) was approved by the FDA for chronic weight management and moderate-to-severe obstructive sleep apnea (OSA).
Utilization has since exploded, with a growing public interest in coverage for weight loss. Simultaneously, GLP-1s continue to receive FDA approval for additional indications. Ozempic is now approved to reduce cardiovascular events and prevent worsening kidney disease in people with type 2 diabetes, while Wegovy is approved to reduce the risk of major adverse cardiovascular events in adults with established cardiovascular disease.
As indications and patient use has expanded, GLP-1s have become one of the top drug spend categories for every health plan. This is due in part to the fact that MCOs were not involved in any of the planning around GLP-1 approvals, leaving them in the unenviable position of having to play catch up with shifting regulations and indications.
Now, they’re at a tipping point, where the costs and utilization of GLP-1s are no longer sustainable.
More to come
There isn’t much relief on the horizon for payer organizations. Thirty-nine new GLP-1s are currently in clinical trials, and the possibility of Medicare coverage for GLP-1s for weight loss treatment, while on hold for now, could reverse itself at any time. Plus, with 14 states already approving GLP-1 for weight loss in Medicaid patients, plans servicing certain states may be feeling the financial pinch more acutely than others.
Adding to the concern is the accelerating pipeline of other high-cost biologic therapies such as cell and gene therapies for rare diseases and neurological conditions such as Alzheimer’s, multiple sclerosis, and Parkinson’s Disease.
Also, like GLP-1s, utilization of biologics leads to increased drug spend. One study showed that psoriasis drugs accounted for 41% of total Medicare Part D spending by dermatologists from 2013 to 2017. With the 2025 Medicare Part D out-of-pocket cap of $2000, plans project an increase in utilization of these high-cost drugs.
Developing GLP-1 strategies that work
For these reasons, taking a wait-and-see approach to GLP-1s simply won’t work, especially for Medicare plans. That’s why MCOs must act now to understand their options and create customized utilization strategies. A few potential initiatives to consider include:
Auditing prior authorizations. Health plans should perform routine prior authorization audits, whether they handle their prior authorizations in-house or outsource the work to their pharmacy benefit manager (PBM). Audits will ensure that GLP-1s were appropriately approved with accurate quantity and time period limits and that PBMs and other partners are accountable for their prior-authorization practices.
Using predictive analytics. Payers can use data to predict the likelihood of adherence to GLP-1 therapies and guide the most appropriate members into care management plans. Predictive analytics can also support decisions regarding which GLP-1s (Ozempic, Rybelsus, Mounjaro, or Wegovy) may be most effective for certain members with type 2 diabetes, helping plans inform their pharmacy formularies.
When weighing the pros and cons of automation and predictive analytics, plan leaders should explore the potential of the data and technology tools they use now, rather than adopting new ones. A trusted advisor can help payer organizations take an objective look at their existing tech stack and determine how to use it effectively in a GLP-1 strategy.
Inform members of potential alternatives. Although Medicare Advantage Prescription Drug Plans (MA-PD) cannot directly enroll members into manufacturers’ patient assistance programs or other prescription discount cards, they can educate them about the opportunity to do so.
Additionally, MCOs may choose to enter Medicare members with obesity into care management programs that support bariatric surgery. Currently, Medicare covers Roux-en-Y gastric bypass, laparoscopic sleeve gastrectomy, and biliopancreatic diversion surgery for members with a body mass index (BMI) of 35 or more. These surgeries are proven to be effective over the long term and could provide a less expensive option than GLP-1s for select members.
Prepare for the next wave
Although the April decision by the Trump administration may have delayed GLP-1 coverage for weight loss, the trendline for Medicare plan leaders is clear. Demand is rising, similar drug classes are expanding, and medical costs will likely continue to rise. By creating utilization strategies around GLP-1s and other high-cost therapies now, plans will be prepared for whatever happens next.
Leslie Lotano-Saba
Leslie Lotano-Saba, RPh, MS, is a managing director with AArete, leading the firm’s pharmacy solutions practice. She has more than 35 years of experience leading managed care pharmacy programs at payers and pharmacy benefit managers (PBMs), with expertise across strategy, operations and performance improvement. She can be reached at [email protected].
