Managing GLP-1 coverage: an emerging challenge for state employee health plans

Obesity management, particularly coverage for GLP-1 drugs, has become a major budget and policy issue for state and municipal health plans. In a recent survey of commercial employers, nearly 8 in10 employers report that GLP-1s are driving an increase in their health care costs. ¹ State and local purchasers are experiencing similar pressures, with some states reporting year-over-year specialty drug spending increases of more than 200%. GLP-1s can provide many clinical and lifestyle advantages, but the rapid rise in demand and spending are forcing tough choices about who is covered, how much purchasers contribute, and how to keep access fair.

Evidence remains limited on which combinations of coverage and care approaches are most effective to optimize the value of GLP-1 utilization, so purchasers are taking different paths depending on their populations and needs and continually re-assessing their approach. A recent Business Group on Health report found that “while more than half of employers that cover GLP-1s for weight management expect the expensive medications to yield significant clinical benefits, few have yet seen evidence (such as a reduction in obesity rates and fewer employees needing bariatric surgery) within their aggregated claims.”²

For state employee health plans (SEHPs), highly regulated and extended procurement processes, involvement of unions and other local stakeholder groups, and annual budget cycles heighten the importance of taking a longer-term view on health to understand long-term costs and benefits of GLP-1 therapies.

Commercial employers and state and municipal health plans alike are looking to manage near-term costs while building the evidence needed for long-term benefit design. Four key levers are emerging:

1. Utilization management and prescribing controls

Many purchasers are focusing on how GLP-1s are prescribed and accessed rather than changing coverage itself. These approaches are intended to improve prescribing appropriateness, reduce unnecessary variation, and ensure medications are used for patients most likely to benefit.

Common approaches include:

• Prior authorization requirements
• Step-therapy pathways
• Structured reauthorization processes
• Pharmacy benefit management controls
• Sole- or limited-prescriber models that restrict prescribing to designated clinicians, obesity medicine specialists, or approved provider networks

The goal is not to reduce access, but to ensure that treatment decisions are evidence-based and supported by appropriate clinical oversight. Commercial employer surveys suggest that many purchasers are increasingly layering these controls on top of traditional coverage requirements.³

2. Integrated obesity care models

Some purchasers are embedding GLP-1 therapy within broader obesity-management programs that combine physician oversight, nutrition counseling, behavioral support, care coordination and ongoing clinical monitoring. These models are built on the premise that obesity is a chronic disease requiring more than medication alone. By pairing drug therapy with comprehensive support services, purchasers hope to improve adherence, patient engagement and long-term outcomes.

Commercial examples include Twin Health, Form Health and FlyteHealth, which combine obesity medicine expertise with longitudinal patient support and medication management. When implemented effectively, these programs have been shown to improve medication adherence and appropriateness and help patients manage and treat chronic conditions, leading to downstream cost savings. For example, an independent evaluation of Flyte’s partnership with the State of Connecticut found approximately $100 per member per month (PMPM) in medical savings and nearly $30 million in pharmacy cost avoidance.⁴

3. Financing and cost-share approaches

Recognizing that affordability remains one of the largest barriers to sustainable GLP-1 coverage, some purchasers are exploring new approaches to financing obesity treatment. These strategies offer pathways for purchasers to maintain greater cost predictability while preserving (or expanding) access to effective treatments.

Emerging models include:

• Defined-contribution approaches that cap employer spending
• Direct-to-consumer access pathways that sit outside traditional benefit structures
• Shift to transparent pharmacy benefit managers (PBMs) where the PBM agrees to disclose—and typically pass through—its underlying drug costs and manufacturer payments
• Performance-based contracting for cardiometabolic health vendors (e.g., payments tied to outcomes such as medication adherence, weight loss, reduction in BMI, HbA1c levels, blood glucose levels)
• Formulary optimization strategies (e.g., changes to preferred drugs, creation of dedicated GLP-1 tier, and/or changes to cost share)

Commercial examples of vendors that utilize cash pay and defined contribution approaches to help manage costs include Crux Health, Andel Health and RxSaveCard. These approaches reflect growing recognition that the challenge is not only clinical but financial. On the formulary side, employers may choose to make changes through their existing PBM or layer on additional solutions to reduce unnecessary drug spend through vendors such as TruDataRx or US-Rx Care.

4. Coverage limitation and eligibility management

At the most direct end of the spectrum, some purchasers are managing costs by limiting who qualifies for coverage or narrowing coverage altogether. SEHPs have unique operational, legislative and contractual requirements when looking to limit coverage as they are often members of collective bargaining agreements. These agreements require them to work with public appointed boards and navigate statutory rules when adjusting health benefits and may limit implementation of the strategies below.

Examples include:

• Raising BMI thresholds
• Requiring obesity-related comorbidities or other clinical criteria beyond FDA labeling requirements
• Requiring participation in lifestyle or behavioral support programs as a condition of coverage
• Excluding anti-obesity GLP-1 therapies altogether

These approaches can produce more immediate budget control and predictability but may also limit access for some employees. Employers should be careful about pulling back coverage for members who can no longer afford medications as this may cause employees to gain back lost weight and experience poorer physical health than before. Many purchasers continue to view these policies as interim responses while stronger evidence emerges regarding long-term outcomes, treatment duration, and return on investment.

Implications for SEHPs

For SEHPs, the opportunity is not simply to adopt existing approaches but to evaluate them rigorously. States can leverage their scale to generate evidence on what works, for whom, and under what circumstances. To see how states across the country are covering GLP-1 therapies, we encourage you to visit the resource linked here.

If considering implementing expanded GLP-1 coverage or a cardiometabolic health program, start by asking:

• Who should qualify for GLP-1 coverage under our plan?
• What prescribing and access controls will we require?
• How will we manage cost while tracking whether the benefit is working over time?