Roger W. Ferguson Jr. is former vice chairman of the Board of Governors of the U.S. Federal Reserve System and a past president and CEO of TIAA. Grant Verstandig is founder, CEO and chairman of venture studio Red Cell Partners and founder and former CEO of Rally Health.
For the40.3 percent of Americans who are obese, GLP-1 medications for weight loss are not vanity drugs. They’re a lifeline with the potential to improve quality of life, prevent chronic disease and reduce long-term health care costs. Ensuring access to these therapies, one of the greatest medical discoveries since penicillin, isn’t just sound policy; it’s a public health imperative.
That’s why the White House’s recent announcement of TrumpRx, a prescription drug pricing program designed to expand coverage and drastically reduce the cost of GLP-1s and certain other medications, is fueling hope for millions.
But although TrumpRx is a positive step toward improving access and affordability for those on Medicare and Medicaid, and even the uninsured, it doesn’t address the more than160 million Americans who receive health insurance coverage through their employers.
To truly democratize access to GLP-1s and other quality of -life therapies — high-demand, high-cost medicines that require ongoing use to support overall health and well-being yet are excluded from standard insurance coverage — we need flexible, employer-driven solutions that align cost with value and that empower employees to take charge of their health.
Health care costs underscore the urgency we face. This year, employers can expect to pay on average$17,496 per employee for health care, a nearly 6 percent increase over 2024 that outstrips both inflation and wage growth. By next year, that figure is expected to climb above$18,500 per employee. These sharp increases, fueled by soaring prescription drug spending on medications like GLP-1s, not only strain employer budgets, they also raise employee paycheck deductions and impact competitiveness in terms of recruiting and retaining talent.
Traditional insurance models featuringpharmacy benefits managers only add complexity. A concept established in the 1960s, PBMs function as middlemen to help manage prescription drug plan benefits and control spending. Among other things, they negotiate discounts with drug manufacturers — much as TrumpRx is designed to do — and process and adjudicate pharmacy claims and design drug benefits. While PBMs are critical players in the prescription drug supply chain, some of their practices — opaque rebate programs that prevent consumers from realizing full savings and layers of red tape that make it harder for employees to access transformative medications — complicate matters unnecessarily.
For example, to cover GLP-1s, small- to mid-sized employers are often required to buy costly coaching, healthy cooking, diet or other lifestyle programs from insurance companies and PBMs, while employees face prior-authorization and utilization-management hurdles. Let’s be clear: Utilization management isn’t about safety or clinical appropriateness. It’s about cost. Period. When these medications become affordable, these programs vanish because their sole purpose is to control expenses.
Another challenge is that most plans cover GLP-1s only for diabetes, which affects38 million Americans. This means that if you have Type 2 diabetes and insurance coverage, your cost for GLP-1 medications is usually limited to a co-pay. But if you want them for weight management to prevent diabetes, you could pay $1,000 or more out of pocket depending on where you get the medications.
From an employer’s perspective, the actuarial math doesn’t add up. Considering that diagnosed diabetes accounted for$413 billion in medical costs and lost productivity in 2022, more must be done to make GLP-1s and other quality of life therapies more affordable so it makes financial sense for employers to add them as a benefit.
What’s needed is greater flexibility in employer benefits programs, allowing companies to pay only for what employees truly value and use. With programs such as LillyDirect and PfizerForAll, pharmaceutical companies have already shown an appetite for working directly with consumers. In these programs, employers partner with light-touch intermediaries who transparently negotiate pricing with pharmacies and pass 100 percent of the savings to the employer. Unlike PBMs that take a percentage of each prescription filled, the intermediary charges the employee only a flat administrative fee. Employers decide how much to contribute toward the medicine and the employee covers the remainder.
Because this approach operates outside of traditional plan design, there are no pre-authorization or utilization management hoops to jump through. Weight management coaching can be added, but is optional. This model ultimately reduces costs, making these medicines more affordable and accessible.
Just as important, it embraces the concept of “consumer as payer,” giving individuals the agency to fund their health care purchases and take control of their health and well-being. Employers maintain cost control, employees gain affordable access, and both parties pay their fair share — nothing more, nothing less.
The path forward is clear: Employers need more flexibility in benefits design and a model that eliminates red tape, reduces administrative burden and empowers consumers. This is how we deliver on the clinical promise of GLP-1s and other quality of life therapies and usher in a new era of affordability, access and better health outcomes.
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