Glucagon-Like Peptide-1 (GLP-1) receptor agonists for type-2 diabetes are increasingly being used for obesity management, while carriers and reinsurers exercise pricing and modelling caution in their analysis of the new drugs’ impact on medical trend and reinsurance.
“Plan sponsors and reinsurers alike have seen a marked uptick in prescription spend on these medications,” Gallagher Re states in its new whitepaper, GLP-1s: Impact on Medical Trend and Reinsurance. “Questions about the long-term medical cost implications – both positive and negative – have intensified.”
The whitepaper brings together current research on GLP-1s, combining it with survey responses from carriers and early market data to examine the potential risks and implications for insurers and employers. “It highlights the importance of understanding the facts, as these therapies could impact both specific high-excess claims and aggregate stop-loss coverage. While there is initial evidence of significant improvements in obesity-related comorbidities, the immediate effects on claims cost and risk are still uncertain,” they write.
The paper’s sources estimate that at least nine per cent of overall prescription spending in many employer-sponsored plans can be attributed to the increased use of GLP-1s.
“To illustrate the scale of this expansion, the non-specialty Rx trend has risen from approximately 3.2 per cent in 2023 to between 10 per cent and 12 per cent in 2024, largely attributed to the escalating use of GLP-1 receptor agonists,” the paper states. “Gallagher Re’s own calculations have indicated that GLP-1 drugs could ultimately drive a one per cent to two per cent addition to overall medical trend.”
They say survey respondents polled by the reinsurer largely agree that the immediate effect of GLP-1s on specific stop-loss coverage is negligible. “GLP-1 medications cost in the range of $10,000 to $12,000 per member, per year and they typically do not breach common high-excess deductibles,” they write. In one example, they say a group of 150 employees and 150 dependents, if even 20 per cent of eligible members required GLP-1 therapy, the aggregate spend exposure could increase by $600,000. “Although actual utilization rates may vary significantly, carriers are recalibrating their underwriting manuals each year to capture this evolving risk.”
One challenge involves adherence: Up to 85 per cent of patients discontinue the therapy within two years, driven in part by side effects, cost and insufficient weight loss maintenance. In another example, 46 per cent of patients with diabetes and 65 per cent of those without, discontinued treatment within one year. “Low adherence rates and episodic therapy patterns complicate projections,” they add. They also warn that adverse effects, including pancreatitis, gallbladder disease and gastrointestinal complications can trigger near-term medical costs.
“Although carriers and reinsurers generally accept that GLP-1s can mitigate conditions like type 2 diabetes and reduce cardiovascular events, the net effect on claims remains to be confirmed,” the paper states. “Given the uncertainty around adherence and clinical outcomes, many stop-loss and reinsurance carriers are waiting for more robust claims data before implementing targeted surcharges or discounts related to GLP-1 coverage.
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