Rising GLP-1 Medication Use to Drive Employer Healthcare Costs

What You Need To Know

Employer healthcare costs may increase by 8% to 9% in the following year, driven partially by the growing use of GLP-1 medications. This rise is part of a trend, with Aon estimating a 9% uptick in health insurance costs for 2024, surpassing the 6.4% increase seen in 2023. This could result in workers shelling out up to 20% of their premiums, equivalent to an average of $3,040 per individual annually or $117 per paycheck.

Notably, the utilization of GLP-1s for diabetes surged by 15.6% in 2024, while the increase for weight loss indications was a substantial 78%. The Business Group on Health expects an 8% growth in employer healthcare costs, marking a 50% cumulative expansion since 2017. Moreover, drug spending, including GLP-1s, spiked from 21% of total expenditure in 2021 to 27% in 2023.

Despite this, price competition between products like Eli Lilly's Zepbound and Novo Nordisk's Wegovy may impact future market dynamics, provided manufacturing challenges and supply shortages are addressed.

Why This Is Important for Retail Investors

1. Understanding the impact of rising healthcare costs on companies can influence investment decisions, especially for those with holdings in healthcare or insurance sectors.

2. Knowledge of trends in drug utilization, such as the increasing use of GLP-1 medications, can provide insights into the growth potential of pharmaceutical companies and their stock performance.

3. Awareness of how employers are managing healthcare expenses can signal broader economic trends and indicate potential areas of investment opportunities or risks.

4. Insights into the shifting landscape of drug pricing and market competition can help investors assess the competitive positioning of pharmaceutical companies and anticipate potential market disruptions.

5. Recognizing the significance of supply chain issues and their effect on pricing can inform investment strategies in sectors impacted by manufacturing challenges, potentially influencing stock performance and portfolio diversification.

Read What Others Are Saying

Yahoo Finance: GLP-1s partly to blame for spike in health insurance costs in 2025