There are good reasons why GLP-1 medications have become one of the most talked about topics in pharmacy benefits. Originally introduced in 2005 to treat diabetes, these drugs gained attention in 2021 when they were approved for weight loss. Since then, demand has skyrocketed, creating shortages for brand-name versions like Ozempic and Wegovy.

With this demand come concerns about affordability. In fact, the Business Group on Health reports that 91% of large employers worry about the long-term cost of GLP-1 drugs for weight management.

And despite the widespread conversations about GLP-1s, many employers still have questions: What do these medications do? How much do they cost? What’s the ROI? And what support programs should be in place?

To help employers get started, we spoke with Nelsie Nelson, Sequoia’s director of pharmacy, and Shannon Arens, Sequoia’s director of wellbeing. While this Q&A isn’t exhaustive, it’s a helpful starting point and we’ve included links to additional Sequoia resources for those who want to learn more.

The Basics

What are GLP-1medications and why have they been in demand in the past few years?

Nelsie Nelson (NN): GLP‑1s are a class of medications that were first introduced in 2005 to help people manage type 2 diabetes. They work by mimicking a natural hormone in the body that helps regulate blood sugar, reduce appetite, and slow digestion. Put simply, these medications help people keep blood sugar steady while feeling fuller longer. Over time, that can lead to meaningful weight loss.

What makes GLP-1s stand out is that they address two major health challenges at once: diabetes and obesity.

Interest really took off in 2021 when the FDA approved semaglutide — better known as Wegovy — for chronic weight management, followed by Zepbound in late 2023. In 2024, the FDA expanded Wegovy’s approval to include reducing the risk of serious heart-related events in adults with obesity or overweight who already have heart disease. That broadened the conversation beyond weight loss.

Are GLP-1 specialty medications?

NN: People often think GLP‑1s are specialty drugs because they’re expensive and come as self-injectables, but they aren’t officially classified that way. Specialty drugs usually require special handling, storage, and distribution through a specialty pharmacy, along with close clinical monitoring. GLP‑1s don’t fit that definition. Most are filled at standard retail or mail-order pharmacies and can be self-administered with minimal support.

Where the confusion comes in is cost. Covering GLP-1s represents a significant investment, with annual gross costs often ranging from $12,000 to $17,000 per person before discounts or rebates. For most employers, that’s a meaningful expense and a key driver of pharmacy spend.

Are employers who provide health coverage required to cover GLP-1s?

NN: Coverage really depends on how the medication is being used. When GLP-1s are prescribed to treat type 2 diabetes, they must be covered because they’re an approved and evidence-based option for diabetes management and are generally considered part of the essential health benefits under the Affordable Care Act.

Coverage for weight management is different. Federal law doesn’t currently require employers to cover medications for weight loss or obesity treatment. That means employers can decide whether to offer coverage for GLP-1s used for weight management.

There are ongoing legal challenges and growing advocacy efforts that could eventually change how obesity medications are classified and covered. We’ll continue to monitor these cases.

What are compounded GLP‑1s and how do they fit into pharmacy coverage?

NN: Compounded GLP-1s are versions of the medication that are mixed by a compounding pharmacy rather than manufactured by the original drug company. In true, limited clinical use cases, they may be used when a patient has a legitimate medical reason that prevents them from taking an FDA-approved product, such as an allergy to an inactive ingredient.

Compounding is an important part of pharmacy practice for certain medical needs, but it’s not the same as producing an FDA-approved medication. Compounded GLP-1s don’t go through the FDA’s review process for safety, quality, or effectiveness. Strength and purity can vary, and there’s no guarantee they contain the same active ingredients or dosage as the original medications.

From a coverage standpoint, compounded GLP-1s are usually not included under plan benefits because they aren’t FDA-approved. If a compounded product is medically necessary, employers should work with their pharmacy benefit manager (PBM) or carrier to ensure it’s obtained through a licensed compounding pharmacy and dispensed under proper medical oversight.

Read: Managing Compounded GLP-1 Medications: A Pharmacist’s Guide for Employers

What are the risks of GLP-1s for employers?

NN: From a pharmacist’s standpoint, the main risks fall into three key areas: clinical safety, long-term sustainability, and cost management.

Clinically, GLP-1s are generally safe when prescribed and monitored properly, but they can cause side effects such as nausea, vomiting, and gastrointestinal discomfort, especially when people first start treatment. Rapid weight loss can sometimes lead to dehydration, gallbladder issues, or nutrient deficiencies if it isn’t supported with good nutrition and hydration. Researchers are also studying potential links to lean muscle and bone loss over time.

There are also risks when people obtain compounded or non-approved versions of these drugs. Since they aren’t reviewed by the FDA, their strength and purity can vary, and some have been found to contain unapproved ingredients.

From a plan management perspective, the biggest challenge is sustainability. GLP-1s are high-cost medications, and while short-term results are strong, adherence over time tends to drop. A 2024 Prime Therapeutics and Magellan Rx study found that only about 14% of people remained on GLP-1 therapy such as Wegovy or Zepbound after three years. Once treatment stops, weight often returns unless lifestyle changes are in place.

Another consideration is cost. There are currently no generic or biosimilar versions of these medications, and it may be years before any become available.

What role do pharmacy benefit managers play in GLP-1 access and pricing?

NN: Pharmacy benefit managers, or PBMs, play a major role in how GLP-1s are priced, accessed, and managed within an employer’s health plan. For self-funded employers, the PBM manages the formulary, pricing, and utilization rules in collaboration with the employer, who has flexibility to shape how these medications are covered. For fully insured plans, those decisions are built into the carrier’s plan design and managed through the carrier’s PBM relationship, giving employers less direct control.

PBMs also negotiate rebates with drug manufacturers in exchange for preferred placement on formularies. Those rebates can be substantial for GLP-1s, but the savings don’t always translate directly to lower employer or member costs. For self-funded employers, rebate savings may flow back depending on the PBM contract structure, while fully insured plans usually don’t receive rebates directly. Instead, they’re generally incorporated into the carrier’s overall premium pricing. Employers often have limited visibility into how rebates are calculated or retained, which makes it difficult to understand the true net cost of these drugs.

PBMs also set the utilization controls that help balance access and affordability, such as prior authorization, step therapy, and BMI or diagnosis requirements for weight-management use.

Read: How to Choose the Optimal Pharmacy Benefit Partner

What options do patients have beyond GLP-1 drugs?

NN: Several anti-obesity medications, also known as AOMs, have been approved for chronic weight management and continue to be used successfully. Most of these options are taken orally once or twice daily, which some people find easier than weekly injectable GLP-1s. They are also considerably less expensive, making them a practical alternative for many patients and plan sponsors.

Although these medications don’t typically produce the rapid 15–20% average weight loss seen with GLP-1s, they can still lead to clinically meaningful reductions of about 5–10% of body weight, which can improve blood pressure, blood sugar, and cholesterol levels.

For some individuals, bariatric or metabolic surgery may also be an option, depending on their overall health, related conditions, and previous treatment history.

Shannon Arens (SA): Sustainable weight management depends heavily on behavior, mindset, and daily habits. Programs that combine nutrition coaching, physical activity, and behavioral support help people build lasting routines and maintain results, whether or not they use medication. These programs also address barriers that medication alone can’t solve, such as stress, emotional eating, or lack of support systems.

Offering a range of options, from clinically guided medications to wraparound or preventive wellbeing programs, ensures that employees can access the right level of care for their needs. It also helps manage costs by supporting lower-cost interventions where appropriate while still providing access to medical therapy for those who need it. Employers that integrate both approaches, clinical and behavioral, tend to see the best long-term health outcomes and overall wellbeing improvements.

Cost and Impact

What role does pharmacy spending play in healthcare costs?

NN: Pharmacy spending makes up a large and growing part of overall healthcare costs. On average, pharmacy accounts for about 25–30% of total healthcare spend, which is significant considering it’s just one component of a health plan.

A big driver of this growth is high-cost medications, especially specialty and brand-name drugs. Specialty drugs represent only about 2% of prescriptions but account for roughly half of total pharmacy spending. With the surge in GLP-1 use, even traditional pharmacy categories are starting to show specialty-level cost trends.

For employers, this is important because pharmacy benefits are often the part of the plan employees use most often. While hospital or surgical claims happen occasionally, prescriptions are filled every month. That steady, recurring spend adds up, and the impact grows when new, high-cost therapies enter the market, or utilization increases.

Working with PBMs or carriers to track data, manage utilization, and applying thoughtful controls can go a long way in keeping spend sustainable. As GLP-1s and other new treatments continue to reshape the market, pharmacy management will remain one of the most effective levers employers have to control overall healthcare costs.

Read: GLP-1 Coverage in 2025: Balancing Cost and Care

How does adding GLP-1 coverage for weight loss affect pharmacy spend?

NN: When employers add GLP-1 coverage for weight loss, it can create a noticeable increase in pharmacy spend. GLP-1s are already covered for diabetes treatment, but expanding coverage to include weight management introduces a new layer of cost. These medications remain among the most expensive on the market, and demand continues to rise as awareness grows.

On average, adding GLP-1s for weight management can raise total pharmacy costs by about 2–5%, and in some high-utilization groups the increase can reach 10–15%. For many employers, that translates to an additional $10 to $25 per member per month in pharmacy spend. This is a meaningful expense, especially when pharmacy already represents roughly a quarter to a third of total healthcare costs.

To put this in perspective, roughly 42% of US adults meet the clinical definition of obesity. In a group of 1,000 covered employees, about 425 may fall into that category, and 5–15% of them could qualify for GLP-1 therapy. Even a few dozen members starting treatment can add several hundred thousand dollars to more than a million dollars a year in new costs, given that these medications typically run $12,000 to $16,000 per person annually.

Because many people stay on these medications long term, overall spending can build quickly. And with no generic or biosimilar versions expected for several years, pricing relief is unlikely in the near future.

Are GLP-1s a big driver in the surge of health care costs and premiums?

NN: GLP-1s are definitely contributing to rising healthcare costs, but they’re one piece of a much larger story. Overall healthcare spending continues to climb due to inflation, higher hospital and provider costs, specialty drugs, and an aging population. Within pharmacy, though, GLP-1s have become one of the most closely watched cost drivers over the past two years.

According to Segal’s 2025 Health Plan Cost Trend Survey, overall pharmacy costs are projected to rise 11.4%, and the specialty drug trend is expected to climb even higher at 13.3%. Analysts note that GLP-1 medications are a meaningful contributor to these increases because of their high cost and rapid adoption. For employers, that growth in pharmacy trend translates directly into higher overall plan costs.

When total healthcare expenses rise, those higher costs eventually flow into premiums and employee contributions. GLP-1s aren’t the only reason premiums are increasing, but their visibility and growing utilization make them an important factor in today’s healthcare inflation.

Read: How Employers Can Contain GLP-1 Costs in Their Health Plans

What are the most common challenges employers face when trying to manage pharmacy costs, especially high-cost therapies like GLP‑1s or specialty medications?

NN: The biggest challenges usually come down to what I call the three Ps: price, parity, and pressure.

The first challenge is price. High-cost medications continue to enter the market, and even with rebates and discounts, prices remain substantial. Specialty drugs, gene therapies, and now GLP-1s are all reshaping pharmacy budgets. Employers are seeing higher year-over-year trend increases and have limited control over how those prices are set.

The second challenge is parity. As new drugs and treatment categories emerge, employers are trying to ensure benefits feel fair and consistent. How do you create policies that feel equitable across different health needs without opening the door to unsustainable costs?

And then there’s pressure. Employees see new medications advertised everywhere, especially GLP-1s, and they’re asking for coverage. At the same time, company leaders want to stay competitive by offering modern, in-demand benefits. That creates a real balancing act between meeting employee expectations and keeping the plan sustainable.

Partnering with PBMs, carriers, and advisors who provide clear reporting and strategic guidance can make a meaningful difference in managing both cost and access.

Read: How Employers Can Contain GLP-1 Costs in Their Health Plans

What levers can employers pull to manage pharmacy spend? How do strategies differ for fully insured versus self-insured employers?

NN: The key is knowing which tools are available based on how your health plan is structured.

For fully insured employers, most decisions such as formulary design, utilization management, and rebate structures are handled by the carrier. Employers in these arrangements can’t directly change plan components, but they can influence outcomes by reviewing plan options carefully, asking how drugs like GLP-1s are being managed, and advocating for programs that combine medication coverage with lifestyle or behavioral support. They can also revisit carrier relationships at renewal to compare pricing and ensure programs align with their goals.

For self-funded employers, there’s more flexibility but also more responsibility. These employers can work directly with their pharmacy benefit manager (PBM) to negotiate terms, adjust plan design, and create strategies specific to their population. That might include setting stricter eligibility criteria for GLP-1 coverage, limiting the duration of coverage for weight loss, or aligning pricing with outcomes through partnerships with point-solution vendors.

Across both plan types, employers can manage spend more effectively by reviewing utilization data regularly and identifying trends before they become major cost drivers. For example, tracking how many members are using GLP-1s and whether those members are also enrolled in lifestyle programs can help employers evaluate both cost and value over time.

Read: Managing Pharmacy Fiduciary Responsibility

How can we measure ROI when it comes to GLP‑1 coverage?

NN: Measuring ROI for GLP-1 coverage depends on how you define value. There are really two sides to it: the financial return and the human, or organizational, impact.

On the financial side, GLP-1s used for diabetes have a clearer ROI story. Better blood-sugar control reduces complications, emergency visits, and hospitalizations, which can translate into measurable cost savings. For weight-management use, the data is still developing. Early studies show promising reductions in medical claims and absenteeism, but the long-term results are still being evaluated.

On the organizational side, the ROI is more about workforce health and engagement. Employees who have access to GLP-1 coverage often view it as a sign that their employer cares about their wellbeing. That can strengthen retention, improve satisfaction, and position the company as an employer of choice in a competitive market. Healthier employees are often more engaged and productive, which adds value beyond direct medical savings.

Employers can start measuring ROI by setting clear goals for what they want the program to achieve. That might include tracking utilization and adherence, comparing weight-loss outcomes across programs, or looking at changes in health-risk factors such as blood pressure, cholesterol, or blood sugar.

Over time, connecting those data points back to absenteeism, engagement, or productivity helps build a more complete picture of value.

Holistic Weight Loss Support

How do third-party or wraparound programs support GLP-1 use?

SA: These programs help employees succeed with weight loss and maintain it long term. GLP‑1s can be effective, but without lifestyle changes, most people regain weight once they stop taking the drug. Wraparound programs pair the medication with coaching, nutrition guidance, and physical activity plans. Some even account for individual factors like joint pain or other health conditions. They also address mental health, which often plays a big role in weight management.

Another benefit is clinical oversight. Many primary care providers don’t specialize in obesity medicine, so prescriptions can feel like a check-the-box approach. Wraparound programs ensure the right medication is prescribed, side effects are managed, and tapering happens safely when it’s time to stop.

Ultimately, these programs help employees build habits that stick, so the results last beyond the medication. But despite all these benefits, Sequoia’s Wellbeing Trends Report showed that only 14% of companies offer a third-party support program.

How should companies think about prevention when it comes to weight loss?

SA: GLP‑1 medications can’t exist in a silo. If employers cover these drugs and do nothing else, they’re setting people up for potential failure and undermining the return on a very large investment.

Prevention has to be part of the strategy. Yes, some employees need medication for conditions like diabetes or obesity, but employers can make a bigger impact by also investing in programs that help people live healthy, active lives before they need costly interventions. Obesity alone costs the economy billions every year through medical expenses, absenteeism, disability, and even workers’ comp. It also raises the risk of heart disease, Type 2 diabetes, and other chronic conditions.

Prioritizing prevention can reduce those costs over time and create a healthier, more productive workforce. It’s about building a benefits strategy that supports long-term well-being, not just short-term fixes.

Looking Ahead

What’s next for GLP-1 coverage?

NN: We’re only at the beginning of what’s possible with GLP-1 therapies. The science is advancing quickly, and the pipeline is full of new medications that target multiple hormone pathways and metabolic conditions. Beyond that, new combination therapies that build on the GLP-1 mechanism are in late-stage trials and showing even greater potential for metabolic health improvement. These innovations will keep this category evolving for years to come.

From a coverage standpoint, employers and health plans are moving toward more strategic, outcomes-focused approaches. We’ll likely see greater emphasis on measuring outcomes, using data-driven utilization management, and integrating medication with lifestyle and behavioral support. Also, affordability will remain a challenge until lower-cost competitors or biosimilars enter the market.

Overall, I’m optimistic. As these therapies expand into new disease areas and become easier to use, we’ll keep learning, adapting, and refining coverage strategies to balance access, cost, and outcomes.

SA: GLP-1s for weight loss are still relatively new to the market, and the conversation around them is just beginning to take shape. From an employee wellbeing standpoint, I see this evolving similarly to how we’ve seen stigma break down around fertility challenges and mental health. Over the past few years, open dialogue has helped normalize these topics, making it easier for employees to seek care and for employers to offer meaningful support. I believe weight management is on a similar trajectory.

As the public conversation around weight loss becomes more prominent, we’ll see more employees feeling comfortable discussing their challenges. That openness will drive demand for benefits that treat the whole person — not just those who are prescribed GLP-1s.

More Resources on GLP-1 and Pharmacy Strategy

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