A recent analysis from the Institute for Clinical and Economic Review, an independent nonprofit that assesses the value of medical treatments, concluded that GLP-1 drugs including Ozempic, Wegovy and Zepbound are cost-effective. In other words, the health improvements they provide are considered substantial enough to justify their price.

Why Cost-Effective Does Not Mean Affordable

In a study published in the Journal of Managed Care and Specialty Pharmacy, Sujith Ramachandran, associate professor of pharmacy administration, explained that a treatment can be cost-effective without being cost-saving for insurers.

“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.

“That is happening because the patient population eligible for this medication is so large. So even if the medications themselves represent good value for society, that does not mean we, as a society, can take the impact of how many individuals would use this.”

According to the Centers for Disease Control and Prevention, about 40% of Americans have obesity. If even a relatively small share of that population began GLP-1 treatment, insurance companies could be responsible for billions of dollars in new spending.

“ICER has a budget impact threshold that estimates whether the uptake of a drug can lead to a budget impact concern,” he said. “The threshold for this year is $821 million.

“GLP-1s blow way past that threshold, even at lower numbers of uptake.”

Long-Term Savings Remain Unproven

Supporters of broader GLP-1 coverage often argue that treating obesity earlier could prevent expensive health problems and reduce medical spending over time. Ramachandran said current evidence has not yet demonstrated that those expected savings actually occur.

“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.”

Many patients stop taking GLP-1 drugs within the first year. Common reasons include the cost of treatment, reaching a target weight, and gastrointestinal side effects. After discontinuing the medication, many people regain some or all of the weight they lost.

Ramachandran said insurers are more likely to see lasting financial benefits if patients can maintain their weight loss and preserve the related reduction in obesity-associated disease risks. Achieving that may require coverage that extends beyond the six months or one year offered by many insurance plans. It may also require providing the same lifestyle support used in clinical trials.

GLP-1 Treatment Requires More Than Medication

“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,” he said. “It was not lifestyle management versus GLP-1; it’s lifestyle management versus lifestyle management plus GLP-1.”

That distinction means patients may need a broader support system rather than medication alone, Ramachandran said.

“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,” he said.

Concerns About Compounded GLP-1 Drugs

When insurance does not cover GLP-1 medications, less expensive compounded products may appear to offer a more affordable option. However, the researchers warn that these alternatives can carry significant risks.

Compounded GLP-1 drugs are not subjected to the same rigorous review process as medications approved by the U.S. Food and Drug Administration, according to Liang-Yuan Lin, an Ole Miss doctoral candidate in pharmacy administration who studies compounded drug pharmacies.

“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.

“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.”

Lin and Ramachandran advise patients to speak with a physician before beginning a GLP-1 medication and to remain under medical supervision while using it. A doctor can help manage side effects, monitor safety, and confirm that the medication is FDA-approved.

Coverage May Expand for Some and Tighten for Others

“I, and I think most people, would hope that everybody who needs this medication gets it,” Ramachandran 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.

“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.”