Many US employers plan to pare health benefits as weight-loss spending soars

Time of India

16-07-2025

New York: More than half of large U.S. employers plan to scale back healthcare benefits next year as rising costs from weight-loss and specialty drugs squeeze budgets, according to a new survey released by consulting firm Mercer on Wednesday.
Among employers with 500 or more workers, 51% said they planned to increase cost-sharing in 2026, including raising deductibles and maximum out-of-pocket costs for workers. That is up from 45% of large employers who said they would increase cost-sharing for 2025.
Concern over the cost of GLP-1
weight-loss drugs
like Novo Nordisk's Wegovy has surged, with 77% of employers naming them a top issue, the consultancy said.
"More clients are saying ... 'I don't know how much longer we can sustain covering these medications'," said Alysha Fluno, a pharmacy innovation leader at Mercer, in an interview.
While some employers have covered GLP-1s hoping for long-term health savings, rising prices are forcing a rethink: "Some employers facing big cost increases in 2026 may feel this coverage is out of reach," Fluno said.
Greater competition in the weight-loss drug market in coming years will give
pharmacy benefit managers
more negotiating power with drugmakers and drive meaningful cost reductions, said Fluno.
Novo's Wegovy and Eli Lilly's Zepbound are listed at $1086 and $1059, respectively, but many patients pay less through their health plans.
Prescription drug costs jumped 8% last year, according to the survey. Mercer has forecast a 5.8% rise in overall health benefit costs for 2025.
Employers are also eyeing alternatives to traditional pharmacy benefit managers (PBMs), according to Mercer.
PBMs such as CVS Caremark, Cigna's Express Scripts and UnitedHealthcare's Optum Rx act as middlemen between drug companies and consumers. They negotiate volume discounts and fees with drug manufacturers on behalf of employers and health plans, create lists of medications that are covered by insurance, and reimburse pharmacies for prescriptions.
Drugmakers say they take an undisclosed cut of the discounts they receive rather than sharing them with patients and payers.
Regulatory scrutiny and calls for transparency are fueling interest in new models and emerging PBMs, with 34% of employers considering a switch.
The survey found 40% of employers are considering alternative contracting models for their prescription medicine benefits, such as those that price drugs based on the wholesale price that retail pharmacies pay for them.
Regulators have criticized the three largest pharmacy benefit managers for steering patients toward more expensive drugs and inflating prices to generate revenue gains, an accusation that the industry denies.
California pension fund CalPERS, the second-largest public purchaser of health benefits in the U.S., announced on Tuesday that Caremark would replace UnitedHealth's Optum Rx as the fund's PBM in 2026. CalPERS said its five-year contract with Caremark requires the PBM to boost transparency and oversight.