A University of Mississippi study explores why insurers often decline coverage for GLP-1 weight loss drugs despite evidence they are cost-effective. Researchers find that cost-effectiveness does not guarantee cost savings for insurers due to the large eligible population, and that compounded…
Despite mounting evidence that GLP-1 medications improve health outcomes and are worth their price, many insurance plans still limit coverage for these drugs. University of Mississippi researchers are investigating the reasons behind this gap and the implications for patients seeking treatment.
The research, led by Sujith Ramachandran, an associate professor of pharmacy administration, was published in the Journal of Managed Care and Specialty Pharmacy. It builds on a recent report from the Institute for Clinical and Economic Review ICER , an independent nonprofit that evaluates the value of medical treatments. ICER determined that GLP-1 drugs such as Ozempic, Wegovy and Zepbound are cost-effective, meaning the health benefits they provide justify their price.
Ramachandran explained that while the ICER report shows these medications offer considerable value to society, that does not automatically translate into cost savings for insurance companies. "The ICER report shows that GLP-1s, at the cost that they are currently being sold, provide tremendous value to society," he said. "But the impact they create on the budget is still massive."
The core issue, according to Ramachandran, is the enormous number of people who could potentially use these medications. Data from the Centers for Disease Control and Prevention indicates that approximately 40 percent of Americans are obese. Even if only a fraction of those individuals sought GLP-1 treatment, insurers could face billions of dollars in additional costs.
ICER uses a budget impact threshold to estimate whether widespread uptake of a drug might create financial concerns. Ramachandran noted that the threshold for this year is set at $821 million. "GLP-1s blow way past that threshold, even at lower numbers of uptake," he said.
A common argument in favor of GLP-1 coverage is that these drugs could act as a preventive measure, reducing future healthcare costs associated with obesity-related conditions like cardiovascular disease, liver disease and kidney disease. However, Ramachandran said the existing data does not support that claim.
"We expect that if we address the obesity issue in this country, then in theory, it should create savings down the road for cardiovascular conditions, liver conditions and kidney conditions," he said. "But does that mean it actually produces savings? Well, the existing data do not show that."
Part of the reason is that many patients stop taking GLP-1 medications within a year. Why do they stop? Ramachandran cited several factors including cost, reaching their goal weight, and gastrointestinal side effects. In many cases, those patients regain the weight they lost, negating the potential long-term health benefits.
To make GLP-1s truly cost-saving for insurers, Ramachandran argued that companies must help patients sustain weight loss and the associated reduction in risk for diseases related to obesity. This means not limiting GLP-1 coverage to six months or a year, as many insurers currently do. It also means providing the same support that made these drugs effective in clinical trials.
"The first thing to remember is that all of the clinical trials, GLP-1s were not tested against no treatment; they were tested against lifestyle management interventions," Ramachandran said. "It was not lifestyle management versus GLP-1; it's lifestyle management versus lifestyle management plus GLP-1."
This distinction is critical. Healthcare providers must offer patients more than just the drug if they want to deliver the desired benefits. Ramachandran outlined the additional services required: "You have to provide them access to a registered dietitian, you have to provide them access to a gym membership, you have to provide them access to a fitness instructor or whatever network of services it is that you can provide to make sure that the change is in a lifestyle and not just in taking a medication once a week."
For patients whose insurance will not cover GLP-1 medications, lower-cost compounded versions can seem like an attractive alternative. However, the researchers strongly caution against this approach.
Liang-Yuan Lin, an Ole Miss doctoral candidate in pharmacy administration who researches compounded drug pharmacies, explained that compounded GLP-1 drugs do not undergo the same rigorous evaluation that U.S. Food and Drug Administration approved medications must pass. "The FDA has already issued warning letters about compounded GLP-1s," she said. "The FDA has found websites selling unapproved ingredients or even the wrong ingredients, which is terrifying for patients."
Lin emphasized that patients cannot be certain about the quality or safety of these products. "Even if they're listing the right ingredients, you don't know where these ingredients are from or how they've been transported or handled, which could be really dangerous," she said.
Both Lin and Ramachandran recommend that anyone seeking GLP-1 drugs consult with a physician both before starting and while taking the medication. This is to manage potential side effects, ensure safety, and confirm that any medication received is FDA approved.
Ramachandran acknowledged that the landscape of GLP-1 coverage is shifting, but not uniformly. "I, and I think most people, would hope that everybody who needs this medication gets it," he said. "But what we are seeing is that GLP-1 coverage is getting more accessible for specific conditions, sleep apnea, diabetes, extremely high BMI or a combination of these things, but for other conditions, coverage is probably going to get more restrictive."
He concluded with a strong warning about compounded pharmacies: "But those compounding pharmacies are so dangerous. Those prices are more reasonable because these drugs are often not being manufactured correctly, and you don't always know what you're injecting in your body."
The study, published in the Journal of Managed Care and Specialty Pharmacy, highlights the tension between the proven value of GLP-1 medications and the practical financial realities that limit access. Without comprehensive lifestyle support and sustained coverage, the promise of these drugs may remain out of reach for many patients who could benefit.
Peptides referenced: Semaglutide, Tirzepatide, GLP-1.
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