Insurers urged to be ready for Ozempic craze, discuss coverage with clients

With weight-loss drugs like Ozempic rising in popularity across the U.S., credit rating agency Morningstar DBRS says insurers need to talk with their clients to determine coverage solutions.

“Be ready for a lot of interest from members in these benefit plans, because they’re quite popular,” Patrick Douville, VP, North American Insurance Ratings, Morningstar DBRS said.

In the short-term, he said insurance carriers should speak to their group benefit insurers, clients and client sponsors about whether they want to offer that coverage as a benefit — and under what conditions coverage for Ozempic and similar drugs should be offered.

He said there will be a lot of questions about claims and handling as GLP-1 weight loss drugs can be “quite pricey, and all that has to be priced into the benefit packages.”

“Then there’s a long-term opportunity with how does it fit into the toolkit to help your pool of plan members to be healthier and, ultimately, sort of to help your claims in the long run,” Douville added. “I think it's also how these drugs maybe can replace some existing treatments that maybe would have been more intrusive or more costly.”

Uptick in Ozempic-category drug claims

According to research from Morningstar DBRS, health and group insurers have begun paying out more claims related to the use of GLP-1 drugs like Ozempic and Mounjaro, which are generating record sales for the pharmaceutical industry.

This uptick is partially driving the need for insurers to decide on coverage, Morningstar DBRS suggested.

“In the short-term, what we see is more that insurers have to deal with claims related to this, and whether or not this plan sponsors or, ultimately, whoever is going to pay the bill for these insurance programs, whether they want to cover it or not and include it in the benefit packages that are offered,” Douville said.

Diabetes vs strictly weight loss

However, Douville noted that a critical point of discussion will be whether GLP-1 drugs are covered specifically for diabetes or just for weight loss. Currently, many insurance plans either do not cover it or only cover it for diabetes, which the drugs are primarily designed to treat.

He said insurers will have to deal with the challenge of clients attempting to get a diabetes diagnostic just to get coverage. In some cases, he suggested, insurers may have to “police” claims to determine which are real diabetes claims and which are not.

“You just have to be careful that you ultimately offering solutions that are medically recommended,” Douville said. “I think a lot of people are going to try to get prescriptions for these drugs when maybe they wouldn’t be medically recommended. Weight loss sounds good for a lot of people, but again, there might be side effects or there might be people who don’t need weight loss who are abusing these drugs.”

Higher costs

Where insurers choose to fully cover GLP-1 drugs like Ozempic both for diabetes and for regular weight-loss, Douville said they will face a different challenge: higher costs.

“If it’s fully covered in both cases of weight loss or diabetes, then, of course, you know, it’s going to cost extra to the insurance company,” he said. “But, again, most of the time there’s going to be understanding with the sponsor behind the plan that these benefits are covered and that, ultimately, the cost will be borne by the plan sponsor.”

Long-term potential

The popularity of Ozempic and other GLP-1 drugs could have a positive impact for insurers in the long run if it proves to be a cost-effective solution for lowering obesity and mortality rates, Douville said.

He noted that improved health outcomes could help keep premiums and claims for health insurance, life insurance and possibly even disability insurance and long-term care low.

“I think there’s optimism that these kinds of treatments can help people stay healthier longer in their lives… Ultimately, I think it’s less direct or like it’s more something you’re going to see over time,” Douville said.

While he granted it’s still too early to decisively measure and understand the effectiveness of GLP-1 drugs compared to other treatments, he suggested that a new trend the U.S. insurance industry could see over time is that large life insurers may try to get policyholders on GLP-1 treatment to improve their health.

“It really expands the toolkit,” Douville said. “Ultimately, the health care industry has to help with individuals with the health, but anything that could have improved that could have some benefits for insurers.”

At the same time, he said there is nothing wrong with insurers taking a wait-and-see approach to find out whether new, cheaper versions of the drug will be developed or whether it is ultimately approved for certain health conditions.

“But, again, it’s a conversation they have to have with their clients,” he said.

Morningstar DBRS is an independent credit ratings agency with offices in the United States, Canada and Europe. As of 2024, it is the fourth-largest global ratings firm.

Rayne Morgan is a content marketing manager with PolicyAdvisor.com and a freelance journalist and copywriter.

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Rayne Morgan is a journalist, copywriter, and editor with over 10 years' combined experience in digital content and print media. You can reach her at [email protected].