Do GLP-1s really matter?

Over the past several years, glucagon-like peptide-1 (GLP-1) drugs such as semaglutide (Ozempic, Wegovy) and tirzepatide (Mounjaro, Zepbound) have transformed the treatment landscape for type 2 diabetes and obesity.  

In Canada, GLP-1s have grown significantly in public and private drug spending. Data from the Canadian Institute for Health Information shows that the rise in diabetes and obesity drugs was responsible for a large share of public drug cost growth. Employers report increased coverage of GLP-1 therapies, particularly as more employees request access for weight-loss indications beyond diabetes. A recent Canadian employer survey found nearly one-third of plan sponsors now cover GLP-1s for both diabetes and weight management − up from less than 20 percent just a year earlier.  

Why GLP-1 Drugs Matter to Benefit Plans 

Originally developed for type 2 diabetes, GLP-1 drugs work by enhancing insulin secretion and slowing gastric emptying, which helps with glucose control and weight loss. Their effectiveness has sparked enthusiasm among clinicians and patients. However, the high unit costs − often several hundred dollars per month  − mean these drugs can quickly escalate pharmacy spend. 

GLP-1 medications are often classified as specialty drugs, a category that typically accounts for a disproportionate share of plan costs despite low utilization. Specialty drugs can make up over 30 percent of total drug spend while being used by only a small fraction of members.  

For employers providing health benefits, this introduces several strategic challenges: 

• Rising premiums: Employers that include GLP-1 coverage − especially for weight-loss indications − may see increases in overall benefit costs, especially since they are categorized under lifestyle medications, which is a benefit not often provided by Canadian employers. 

• Plan design complexity: Plans must decide how broadly to cover GLP-1 drug indications, balancing clinical benefit with financial risk.  

• Employee expectations: As awareness of these treatments grows, employees increasingly expect coverage − even when the indication (e.g., obesity) is not universally approved by regulators.  

This combination of clinical demand and financial risk is prompting many employers to review and adapt their benefits strategies. 

Strategies employers can use to manage GLP-1 costs 

Balancing cost control with meaningful access requires thoughtful plan design and member support. Below is a list of practical strategies and ideas that Canadian employers can consider: 

1. Use utilization management wisely 

Utilization management tools such as prior authorization, step therapy, and clinical eligibility criteria can ensure that GLP-1 therapies are approved only when medically appropriate. Common criteria include: 

• established type 2 diabetes diagnosis or a BMI threshold with comorbid conditions 

• documentation of prior treatment attempts 

• ongoing clinical review to ensure continued need 

Prior authorization works especially well when it confirms medical necessity and prevents inappropriate use.  

Step therapy encourages starting with lower-cost alternatives or lifestyle interventions before moving to GLP-1 drugs, helping curb unnecessary spending.  

2. Tiered or targeted coverage 

Rather than blanket coverage, employers can design tiered benefits that differentiate clinical uses. For example: 

• full coverage for diabetes indications 

• restricted coverage for weight-loss claims, subject to clinical thresholds 

• time-limited coverage (e.g., 12–24 months), after which employees must meet re-evaluation criteria 

Employers may also consider annual or lifetime caps on expensive drug therapies to define financial exposure.  

3. Partner with a PBM or benefits expert for transparency 

Working with a pharmacy benefit manager (PBM) that provides transparent cost and utilization data can help employers understand where costs are coming from and identify opportunities for savings. A strong PBM partner can assist with: 

• negotiating rebates 

• monitoring prescribing patterns 

• supporting clinical management programs 

Transparent PBM partnerships allow for actionable insights instead of opaque fee structures.  

4. Promote holistic health and weight-management programs 

GLP-1 drugs are most effective when part of a broader clinical care plan including lifestyle change. Employers can invest in nutrition counseling, physical activity support, and behavioral health coaching to help employees achieve healthier outcomes − potentially reducing long-term reliance on high-cost drugs.  

Wellness programs that reward healthy behaviors may reduce future pharmaceutical need, demonstrate employer commitment to holistic care, and save employers in the long-term 

Looking ahead 

While these therapies promise meaningful improvements in diabetes and weight management, their cost implications are significant and require proactive planning. Employers must strike a balance between providing access to cutting-edge treatment and protecting the sustainability of their benefits plans. 

To do this, benefit leaders need data-driven strategies, agile plan design, and a focus on holistic employee health. With thoughtful implementation, employers can manage costs effectively while supporting meaningful clinical care − ensuring that benefits remain both attractive and financially sustainable in an era of rapid drug innovation. 

Jeffrey Stinchcombe is a partner with People Corporation, Canada’s leading employee benefits provider, with offices nationwide. With over three decades of employee benefits experience, Stinchcombe brings a wealth of knowledge as a subject matter expert.  

Jamil Jamal is a principal with People Corporation. Over the past 11 years, Jamal has published numerous articles, co-instructed a course called Best Practices of Employee Benefits with Jeffrey Stinchcombe, and been a member of the advisor council for one of Canada’s leading insurance carriers.