Many US employers plan to cut back on healthcare benefits as weight-loss spending soars

NEW YORK – More than half of large US employers plan to scale back healthcare benefits in 2026 as rising costs from weight-loss and speciality drugs squeeze budgets, according to a new survey released by consulting firm Mercer on July 16.

Among employers with 500 or more workers, 51 per cent said they plan to increase cost-sharing in 2026, including raising deductibles and maximum out-of-pocket costs for workers.

That is up from 45 per cent 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 per cent 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 Ms 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,” Ms Fluno said.

Greater competition in the weight-loss drug market in the coming years will give pharmacy benefit managers more negotiating power with drugmakers and drive meaningful cost reductions, said Ms Fluno.

Novo’s Wegovy and Eli Lilly’s Zepbound are listed at US$1,086 (S$1,395) and US$1,059, respectively, but many patients pay less through their health plans.

Prescription drug costs jumped 8 per cent in 2024, according to the survey. Mercer has forecast a 5.8 per cent 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 fuelling interest in new models and emerging PBMs, with 34 per cent of employers considering a switch.

The survey found that 40 per cent 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 criticised the three largest pharmacy benefit managers for steering patients towards more expensive drugs and inflating prices to generate revenue gains, an accusation that the industry denies. Reuters