CVS Health says lower GLP-1 pricing could improve employer health plan costs

Traders Union
All News
Business & Wealth
Companies
GLP-1 pricing and employer costs

Highlights

CVS Health's analysis finds GLP-1 drugs become cost-neutral for employer plans only if priced below $350 per month, based on Aetna claims data.
After three years on GLP-1s like Mounjaro, Ozempic, Zepbound, and Wegovy, plan sponsors save $9,400 per person on medical bills but spend $13,300 more on prescriptions, resulting in a net $3,900 cost increase per person.
Rising premium pressures for 2027 are leading 14% of companies to drop or plan to drop GLP-1 coverage, as projections show premiums climbing over 9%.

Claims analysis points to pricing threshold

As reported by Reuters, CVS Health says an analysis of Aetna insurance claims data finds that current GLP-1 prices remain too high for reduced medical spending to fully offset prescription costs across patients with obesity, diabetes and other conditions. The company says the break-even point for employers and other plan sponsors comes when the medicines are priced below $350 per month.

The analysis compares patients newly taking GLP-1 drugs from Eli Lilly and Novo Nordisk with similar patients who are not using the medicines. The review includes Mounjaro and Ozempic for diabetes, and Zepbound and Wegovy for obesity, covering periods of up to three years.

CVS says GLP-1 use for obesity, diabetes or other conditions is associated with 10% to 12% fewer emergency room visits in the first and second year of treatment. It examines records for 60,000 people in the first year and 20,000 in the second year.

An analysis of 4,000 people still taking the drugs after three years shows hospitalizations fall by 34% to 42%. The report says plan sponsors save $9,400 per person on medical bills but spend $13,300 more on prescriptions, leaving a net cost increase of $3,900 per person.

Coverage pressure builds for 2027

Coverage of GLP-1 drugs for obesity is falling as corporations and other health plan sponsors try to contain premiums expected to rise by more than 9% in 2027. About 14% of companies have already dropped or plan to drop coverage for the drugs in 2027.

Dr. Amy Compton-Phillips, chief medical officer at CVS Health, says drugmakers' direct-to-consumer pricing suggests they can still profit while charging less than $350 a month. She adds that the price at which GLP-1s begin to save money overall depends on a patient's health status, with older people with diabetes facing higher hospitalization risk than younger people with obesity alone.

CVS, which also operates pharmacy benefit manager Caremark and a retail pharmacy network it plans to spin off, says the findings underscore how drug pricing shapes the broader cost equation for U.S. healthcare. The U.S. continues to spend more on healthcare than any other country.

We have previously noted Fitch Ratings' decision to place Kazakhmys Insurance ratings on negative watch amid profitability and solvency concerns.

This material may contain third-party opinions, none of the data and information on this webpage constitutes investment advice according to our Disclaimer. While we adhere to strict Editorial Integrity, this post may contain references to products from our partners.