In recent years, the management of employee benefit plans has become a crucial aspect of running a successful business. Offering comprehensive health and wellness benefits helps attract and retain top talent and contributes to a healthier and more productive workforce. However, one specific medication has been making waves in the world of employee benefit plans, raising concerns about cost management: Ozempic. This blog delves into Ozempic’s Impact on Benefit Premiums and how the use of Ozempic is impacting employee benefit plan costs for employers and employees.
Understanding Ozempic
Contrary to popular belief, Ozempic is not a weight loss drug. Ozempic was approved by Health Canada in 2018 as a second-line treatment for type 2 diabetes. Ozempic increases insulin production and reduces glucose production in the liver, leading to better blood sugar control. A main side effect of Ozempic is weight loss of up to 15% of body weight[1]. If you want to keep the weight off, you have to take this drug for the rest of your life. This weight loss phenomenon has caught many people by surprise. However, Ozempic is not yet approved by Health Canada for weight loss, and we are starting to see it appear as a leading and, at times, the number one paid drug resulting in increased group health rates. While Ozempic offers significant patient benefits, its high cost has sparked concerns among employers providing healthcare coverage to their employees.
The Cost of Ozempic
One of the most pressing issues surrounding Ozempic is its steep price tag. Pharmaceutical companies invest considerable resources in research, development, and regulatory approvals for new medications, and those costs are often reflected in the final price. As a result, the cost of Ozempic can be significantly higher than other diabetes medications, leading to an increased financial burden on employers who sponsor employee benefit plans. Ozempic is an injection administered once weekly and costs approximately $250 per month or $3,000 annually.
Ozempic’s Impact on Benefit Premiums:
Employers play a pivotal role in offering competitive benefit packages to attract and retain skilled employees. Employee benefit plans typically include medical, dental and prescription drug coverage. However, including high-cost medications like Ozempic can strain the financial resources allocated for these benefit plans. The rising cost of Ozempic can result in several adverse effects on employee benefit plans. For example, employers may be forced to raise employee premium contributions to accommodate the rising cost of Ozempic and other expensive medications. This can lead to dissatisfaction among employees, who may perceive reduced affordability and value in their benefit plans. We want our team to get the care they need but sometimes, higher costs mean higher barriers. Employees relying on Ozempic might feel the pinch with higher co-pays and deductibles.
Cost-Sharing Challenges:
Employers may need to adjust the structure of cost-sharing arrangements, such as co-payments and deductibles. Employees relying on Ozempic may experience increased out-of-pocket expenses, potentially deterring them from accessing necessary medications and care.
Budget Constraints:
The escalating cost of Ozempic can strain an employer’s budget allocated for employee benefits. This may limit the resources available for other critical benefits or workplace initiatives, affecting overall employee satisfaction and well-being.
Prescription Drug Formulary Adjustments:
Employers may need to reevaluate and adjust their prescription drug formularies to manage the cost of medications like Ozempic. This could involve changing coverage tiers, introducing step therapy, or even excluding certain medications from coverage altogether.
Addressing the Challenge
As the cost of medications like Ozempic continues to impact employee benefit plans, employers are exploring various strategies to mitigate the financial burden while ensuring employees receive the care they need:
Wellness Programs:
Employers can invest in wellness programs that focus on promoting healthy lifestyles, reducing the risk of chronic conditions like type 2 diabetes, and improving overall employee well-being. Programs like Wiegers Financial & Benefits’ Wellness Partner Program program aids employees in supporting their well-being while mitigating costs.
Preventable Measures:
We recognize diabetes and obesity are complex medical issues, and by focusing on preventable measures, such as healthy eating, physical activity, monitoring, medication, problem-solving, reducing risks, and healthy coping, we can achieve favorable outcomes for our clients and their valued employees.
Benefit Plan Communication:
Transparent communication with employees about benefit plan changes, including coverage adjustments for high-cost medications, can help manage expectations and minimize surprises.
The use of Ozempic has undoubtedly transformed the management of type 2 diabetes and improved the lives of many individuals. However, the off-label use of Ozempic poses challenges for employers striving to provide competitive and sustainable employee benefit plans. By implementing innovative strategies and fostering open communication, employers can adapt to the evolving healthcare landscape while ensuring the well-being of their workforce. Our Director of Innovation and Growth, Michael Carss explains more below. If you’d like to learn more, please contact us.
Michael Carss, B. Comm.
Director, Innovation & Growth
Wiegers Financial and Insurance Planning Services Ltd.