The cost of hot new weight-loss drugs could put some companies out of business, Blackstone exec warns

• Execs at a healthcare conference debated whether employers should pay for workers' weight-loss drugs.
• A Blackstone exec warned that the costly GLP-1 drugs could put some employers out of business.
• Panelists agreed that companies covering the drugs should do so as part of a broader support program. 

As more people seek out expensive drugs that help with weight loss, their companies are facing difficult decisions about whether to pay for them.

For some companies, it just doesn't make financial sense, an executive at private equity giant Blackstone said Tuesday during a panel discussion at the HLTH conference in Las Vegas.

Andreas Mang, the CEO of Equity Healthcare, a division of Blackstone, said spending on these diabetes and weight-loss drugs, known as GLP-1 agonists, spiked 600% across Blackstone's portfolio in the last four years. Shouldering those huge costs aren't practical for companies in industries like hospitality where employees don't stick around for long.

"The cost side of the equation, it's real. It's going to put pressure on companies. And if this were to continue, companies are going to get put out of business, because they literally won't be able to do anything but pay for GLP-1s," he said.

GLP-1s, such as Ozempic, Wegovy, and Mounjaro, have soared in popularity. The drugs are effective—they can help people lose 15% to 20% of their weight, which is more than previous generations of prescription drugs.

But they're also expensive. A month's worth of these injections can run about a $1,000 or more. And because more than 40% of Americans are considered to have obesity, the costs to those who typically pay for healthcare, such as employers and state governments, could be overwhelming. The benefits firm Aon recently projected that employers' health-insurance costs will climb 8.5% next year, fueled in part by weight-loss drugs. These dynamics have led to a fiery debate over who should use these medications and who should pick up the tab.

Dr. Melynda Barnes, the chief medical officer at digital-health startup Ro, which prescribes weight-loss drugs, argued during the panel that the conversation around these drugs should focus less on employers and health plans' bottom lines. Whether or not someone gets a GLP-1 drug should be a conversation between the patient and their doctor, she said.

"What's really scary is that we are using cost — which for the medication will not be this expensive for the duration of our lives — as a reason to affect what kind of medications people have access to," she said.

She continued, "There is a negative stigma attached to obesity and now they feel like they actually have a shot at life, whether that's having children, playing with their kids, going on vacation, taking a flight to Europe without having to buy a second seat."

Panelists generally agreed, though, that if employers do decide to cover the drugs, they should do so as part of a broader program that helps those workers form better nutrition and activity habits or provides support for side effects.

"When brought to bear in a system that is providing ongoing support for an employee, they make great sense, but just unleashing them, releasing them without any kind of support, I think is a recipe for disaster. And I also believe it's a waste of money," said Lucia Guillory, chief people officer of Virta Health, which helps people reverse Type 2 diabetes through nutrition and coaching.

Wei-Li Shao, president of Omada Health, said employers should cover the drugs alongside a support program that ensures patients on them get the best outcomes.

Omada, a diabetes management company, rolled out a program earlier this year to help companies manage their employees' use of weight-loss drugs and provide that extra lifestyle support both when they're on the drugs and when they come off. Shao said some companies working with Omada have chosen to cover the drugs for a limited period, such as one or two years.

"We've got to construct solutions that can be companions to GLP-1s," Shao said. "They're not going away. Pharmaceutical companies will spend billions, tens of billions of dollars making these commercially successful. So how do we create companion programs and support programs that not only amplify the effectiveness of these products, but then also make them affordable in the long run?"