Why GLP-1s aren't lowering employers' costs

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0:46This is the Indicator from Planet Money. I'm Waylon Wong here today with my good chum, Julie Wernow. She's a reporter for the health policy podcast Tradeoffs, and we used to work together at the Chicago Tribune. We sure did, Waylon, back in the age of flip phones. Julie, you've been reporting recently on all these weight loss medications. Ozempic, Wagovi, Zepbound. Right. The number to remember here, one in eight. That's how many adults are on these drugs in the U.S. alone. Nick Miller is the perfect example. By the time Nick was in his 40s, he weighed more than 400 pounds. He was constantly thinking about food.

1:27Should I eat? Do I deserve to eat? Something he calls food noise. That first dose of Ozempic on a Tuesday in April, and within three hours, that noise was gone. And all of a sudden, my brain had room. Like, there was silence. Nick was lucky to afford the drug. His employee health benefits covered the medication. Like the majority of working-age people, he gets his health care coverage through his employer. But here's the thing. The vast majority of employer health plans don't cover GLP-1s for weight loss. Only 20 percent do. That 20 percent believe it will be good for their bottom line. That the investment will ultimately pay off with fewer medical claims tied to health issues from obesity.

2:14Today on the show, will Nick's employer covering his GLP-1 save money in the long run? The answer might surprise you. This week on Up First, one trend emerging this election season. President Trump actively opposing Republicans he sees as disloyal and endorsing their primary challengers, who've toppled incumbents in multiple states. We're watching key primaries on Tuesday in Kentucky and elsewhere to see if that narrative holds up. and what those races might tell us about November. Listen to Up First every morning on the NPR app or wherever you get your podcasts. Julie, tell us about your old friend Nick.

2:50Nick and I grew up together in Connecticut. I hadn't seen him in more than 20 years. We were drama club geeks in high school. Oh, what'd you do? Guys and dolls? Did you wear fedoras? Please, Waylon. We were more serious drama kids than that. We were in the pajama game. Okay, thespians. That is serious for high school. Nick still lives in my hometown, Waterford, Connecticut. He and his husband have five kids, eight, seven, seven, seven, and six. I dropped by before school. It was full-on kid chaos. Somehow, Nick got everyone out the door. We're going to behave, right? Good days? Love you. After everyone left, we sat down to talk.

3:40Nick said when he got on his GLP-1s, his clinician explained obesity as biology. She was so warm and so welcoming, and she was able to break down for me what was happening in my body. She also gave me permission, saying, like, and Nick, this might be a lifelong choice for you. You know, like, you might continue this for the rest of your life, and that's okay. And I was like, oh. That was huge for him. Before this, Nick thought taking a weekly shot was cheating somehow. From where I was to where I am now, to think of that as cheating, I think, is really a disservice to the science and a disservice to my clinicians and a disservice to me.

4:21And this is where Nick's luck comes in. His employer agrees. He works for the state of Connecticut as a supervisor for its Department of Developmental Services. Sean Scanlon is the guy in charge of Nick's employee health plan. I believe that these drugs can be effective for not just people losing weight and managing their diabetes, but for treating the conditions that then turn to worse problems that then cost plans like the one I run more money in the long run. Sean said they spent about$80 million on GLP-1s last year for employees like Nick. It's certainly saving money for Nick. With this coverage, Nick pays just$12.50 a month.

5:05His employer covers the rest. And they do it in an interesting way. They want to target people who are committed to losing weight. To find those people, Nick's employer hired an outside company to set some rules. He had to weigh himself, track his food and exercise, get labs, and meet with clinicians. The idea here is to get the drugs to the people most likely to benefit and then limit everyone else. It's medical care, but it's also a gate. Nick's fellow workers who are also getting their GLP-1s covered are losing, on average, up to 40 percent of their body weight. They're also seeing major reductions in indicators that can lead to strokes, heart attacks, and diabetes.

5:46It's the employer dream. You cover these medications, people get healthier, and then eventually maybe the health plan saves money because people avoid expensive medical problems and claims go down. I mean, this is a very appealing story. It is. Intuitive, right? You prevent the heart attack, avoid the bill. But this is where your reporting took a turn. Ever run into an economist at a party? Yes, actually. OK, well, I never see them at parties because they are no fun at parties, Whalen. Oh. That's how I felt when I invited Chris Whaley to this little GLP-1 party we're throwing here. He is a health economist at Brown University.

6:27He worked on this big report about these employer GLP-1 strategies. And he's got some bad news on health savings. Every study that's looked at that has shown that's absolutely not the case. Chris says employers have this kind of magical thinking that better health will automatically translate into lower health costs down the road. There's among employers, you know, this kind of magic ideal that we can improve patient health. And that's just going to be this magic wand that cuts employer health care spending. At least for now, the magic wand doesn't work for a few reasons. Right. Reason one, the drugs themselves are expensive.

7:09Cash prices can be up to$1 ,700 a month, according to GoodRx. Employers who cover the bulk of this have to take it out of somewhere, either wages or higher premiums. Reason two, these management programs that Nick had to sign on to to qualify for coverage cost money, too. About a third of employers are paying outside firms like Nick's employer has, and that adds to a business's overall health coverage costs. Reason three, the biggest health benefits generally show up years later, when an employee may not even be on that same employer's health plan. In fact, by then, they're more likely to be on Medicare.

7:46And finally, reason four, healthier people still use health care. One large study of more than half a million patients found no overall spending drop even years after people started GLP-1s. If somebody, you know, is out being healthy and active and twists their knee playing pickleball, I think that's actually, you know, debt positive. You know, I've always been pickleball curious, but now I'm scared because I don't want to twist my knee. I don't blame you, Whelan. I actually know some people have gotten hurt playing pickleball. Oh, no. Yeah, and it's still a claim for the health plan. We should note that Nick's employer has seen some benefit.

8:25Spending is still going up, but at roughly half the rate it was before they signed on with an obesity management company. Most of those savings come from limiting the number of people on the medications. In other words, the savings come from the gate, not from the promise of better health. And that makes for a pretty uncomfortable takeaway. It's clear that Nick's story makes a strong case that these GLP-1s can lead to a lot of health benefits. Even economist Chris Whaley agrees. Treating obesity and getting people to live happier, healthier lives is a goal in of itself. But at least for now, the honest argument is not this will pay for itself.

9:03Right. Although it's worth mentioning that might change at some point. In the long term, GLP-1 prices will go down. And that could change the cost-benefit analysis. Like, take cholesterol medications. They began as a high-cost drug, too. Right. Today, around a third of U.S. adults take these medications. But most are cheap now, and the vast majority of health plans cover them. Either way, for Nick, getting the drugs covered has been a life changer. He now weighs just 243 pounds. He says he's less isolated, more center stage in his life with his kids. I deserve to go after what I want and to have that chance.

9:42You know, I deserve to not live in fear or shame and to experience life in the way that everybody can. That may not save his employer money right now. No, but it might still be worth paying for. Julie Warnow, thank you so much for bringing us this story. Thank you for having me. You can catch Julie on the Tradeoffs podcast, available where you get this podcast, or on the Pickleball Court. This episode was produced by Cooper Katz-McKimmon, engineered by Sina Lafredo. It was fact-checked by Sierra Juarez. Kate Kinkannon is our editor, and The Indicator is a production of NPR.

10:28For poor people in one of the world's fastest-growing megacities, development means displacement and violence. We're homeless now. You know where to stay? No way to sleep. On the Sunday Story, the human cost of building Lagos, Nigeria, into the Dubai of Africa. Listen now to the Sunday Story from the Up First podcast on the NPR app.