Few medical breakthroughs have captured the public’s imagination or insurance budgets, quite like the new class of weight-loss drugs. Medications like Ozempic and Wegovy, originally developed to treat diabetes, have exploded in popularity, promising not just slimmer waistlines but improved overall health. Yet, the rising costs of these drugs are forcing states and insurers into an impossible choice: raise premiums for everyone or cut access to a treatment that many now see as a medical necessity.
The Budget Crisis: When Demand Outpaces Reality
In states across the country, policymakers are watching their health plan expenditures balloon. In Colorado, spending on weight-loss drugs for state employees quadrupled from 2023 to 2024. Delaware projected an initial cost of $1.8 million for coverage in 2023 but ended up spending nearly eight times that amount. These spiraling expenses are prompting difficult conversations about sustainability.
For every state still offering these drugs, the equation is stark: Keep covering them and risk financial instability, or end coverage and face an outcry from workers who feel they are losing a vital health resource. North Carolina and West Virginia have already chosen the latter path, cutting access due to cost concerns. Others, like New Mexico, are scrambling for alternatives—including potential price negotiations or compounded versions of the drugs, which come with regulatory uncertainty.
Why Are the Prices So High?
The high costs of GLP-1 drugs in the United States are not an accident—they are a feature of the American pharmaceutical system. Unlike in many other countries, the U.S. government does not negotiate drug prices on a national scale. Instead, pharmaceutical companies set their own prices, relying on insurers and state health plans to foot the bill.
The numbers are staggering. While an American patient may pay as much as $1,200 a month for Ozempic, the same drug costs just $88 in London. The disparity is due to a mix of factors: government price caps, bulk negotiations by national health services, and a fundamentally different approach to drug pricing. In the U.S., pharmaceutical companies justify the markup by citing research and development costs, but critics argue that much of the funding for these breakthroughs already comes from taxpayer-backed research.
The Patent Barrier: How Long Until Prices Drop?
For those hoping that generic versions of GLP-1 drugs will bring relief, the wait may still be years away. While Novo Nordisk’s Victoza (liraglutide) is set to lose its patent in 2024, allowing generic versions to enter the market soon, newer and more effective drugs like Ozempic (semaglutide) won’t see their core patents expire until 2026. Even then, secondary patents covering formulations and uses extend protection until 2033 in some cases.
This staggered expiration timeline means that widespread access to affordable generics could take years, leaving insurers and policymakers grappling with the financial impact of these drugs in the interim. Until then, brand-name versions will continue to dominate the market at a premium price.
The Policy Puzzle: An Uncertain Future
For states, the decision to cover these drugs is not just about immediate costs but long-term benefits. Supporters argue that by reducing obesity rates, GLP-1 drugs will ultimately lower the financial burden of treating diabetes, heart disease, and other chronic conditions. But policymakers face a troubling question: Will the people benefiting from these drugs today still be on state health plans five years from now? If not, the near-term costs may outweigh the future savings.
Some states are experimenting with alternative models. Connecticut, for example, requires employees to enroll in a lifestyle management program before gaining access to the medications—a strategy that has slowed prescription growth but has not reversed cost trends. Others are considering tighter eligibility requirements, but these efforts risk creating barriers to access that disproportionately affect lower-income workers.
The Unfinished Debate
The fate of GLP-1 coverage in the U.S. is far from settled. As more Americans demand access to these drugs, insurers and governments will continue to wrestle with the financial realities. For now, the question remains: Who should bear the cost of medical innovation—the patients who need it, the employers who provide insurance, or the public at large?
With potential tariffs on Danish-manufactured drugs looming and federal funding uncertainties ahead, the weight of this decision is only growing heavier. And until the patent cliffs arrive, there is little relief in sight.
One thing is clear: In the battle between coverage and cost, there are no easy answers.