Navigating the GLP-1 regulatory landscape: Part 1

It’s official: following last October’s resolution of the shortage of Eli Lilly’s tirzepatide — also known by its brand names Zepbound and Mounjaro — the FDA in late February 2025 officially declared an end to the supply squeeze on GLP-1 semaglutide, which is also branded as Ozempic and Wegovy.

The supply update likely spells the end of widespread GLP-1 compounding in the U.S., which became an immensely popular avenue for patients to access weight loss drugs while the branded products were in shortage. Currently, U.S. regulations allow companies to offer compounded versions of drugs only when the brand-name versions are in short supply. Since GLP-1 drugs have been in shortage since 2022, several companies such as Hims & Hers, Ro, and WeightWatchers have offered compounded versions of the drugs. 

However, the end of the shortage means that many of these companies are now unable to sell the current compounded versions. FDA gave a facility-dependent grace period of 60 to 90 days to stop selling compounded GLP-1 drugs before the agency takes enforcement action, aiming to avoid unnecessary disruptions in patient care.

After the publishing date of this article — May 22 — patients who have been using compounded semaglutide will need to transition to other options, such as Ozempic, Wegovy, or alternative weight loss treatments. Today marks the final day for mass compounders to make essential copies of semaglutide without risking FDA enforcement action.

So what does this mean for the roughly one-third of employers who are already covering GLP-1s as part of their healthcare benefits, and those considering covering them? And the people whose treatment is at risk of being disrupted, or at least made more expensive?

“A majority of employers aren’t ready for the surge in demand yet,” says Danish Nagda, CEO at Rezilient Health. “We have no real idea how many people are on these drugs, but if you look at the demographics and data, around 40% of the population might be eligible to be on GLP-1s.” Commercial payers, which include self-funded employers, have witnessed a surge in the overall costs of their prescription drug benefits, driven largely by spending on antidiabetic medications including GLP-1s. Utilization has been increasing at a higher rate for GLP-1s than other classes and the overall cost has already dented employers’ healthcare budgets, even with less expensive compounded options readily available.

When compared to the blockbuster drugs of the last two decades, GLP-1 utilization is on a different scale. 

Humira, a breakthrough injectable treatment for rheumatoid arthritis and other autoimmune conditions, has been the thorn in the side of many employer-sponsored health plans over the past decade. On average, 1-2 people are on Humira for every 100 people covered by a given plan at $7,000-$8,000 per member per month, with peak industry sales approximately $22 billion annually.

By comparison, the GLP-1 market is on pace to get to around $129 billion in annual sales. With estimates that 9-16% of the U.S. population will be taking the drugs in the next 2-3 years and costs around $1200 per member per month, total spend starts to balloon quickly.

The looming problem created for employer-sponsored health plans by the FDA’s ruling is the current “invisible” use of compounded drugs — millions of Americans are losing the access they previously had through direct-to-consumer platforms, med spas, and directly from manufacturers. “There is a huge number of people who suddenly can’t get compounded versions for $200 on platforms like Hims anymore,” continues Danish. “Employers aren’t in a position to say no to people who have been on these drugs for six months and come asking for coverage, the labor market is just too tight right now.” 

“For customers we’ve spoken to in the past few months, GLP-1s have suddenly gone from not being on the map to being two of the top five drugs by cost,” says Adam Berkowitz, President at Level Health. “If you combine all the drugs in the GLP-1 clinical category, they’re already number two behind oncology, no matter the size of the population covered.”

Employers need to focus on outcomes-based decision-making when considering the impact GLP-1s are likely to have on their health plan and focus on holistic programs with a thoughtful approach to changing lifestyle and behavior to maximize the effectiveness of the medication, as well as mitigate ballooning costs. Relying on insurance companies to implement such plans is not the answer, in Adam’s opinion. “Insurance needs to be a risk capture mechanism, that’s it,” he says. “We’ve mistakenly relied on insurance to manage lifestyle and wellness but programs they’ve introduced have failed across the board: walk more, eat better, sleep better, we all know this stuff. How do we actually change behavior and address these things?”

“The first thing we need to do is to tie GLP-1 coverage to mental health and metabolic health programs,” says Josh Butler, President at High Plains Health Plan. “Things like stress, emotional eating, and trauma are all real contributors to obesity in this country. Lifestyle coaching, nutrition, activity, and sleep are all very important to losing weight, and also regulating type 2 diabetes and other chronic disease management.”

To make it sustainable for employers to cover GLP-1s, they need to become savvy data strategists or work with a benefits adviser who can be a strategic partner.

“Employers need to think beyond just covering the drugs,” continues Adam. “Data-driven monitoring and decision-making needs to be part of your overall risk strategy, because this is undoubtedly the largest financial risk coming for employer-sponsored health plans over the next one to five years.”

“Firstly, plans need to have the right carriers and vendors in place,” says Josh. “The right TPA, stop-loss carrier, PBM, and partners and collaborators are going to be critical to allow the flexibility to customize holistic programs specifically for this issue.” The right PBM is particularly critical, according to Josh, to ensure performance or rebate guarantees are not voided by the introduction of a holistic program. 

Both Josh and Adam see a huge opportunity for employers to reevaluate their contracts and relationships with their carriers and vendors and push for a new approach to their health plan to have a full scale reevaluation of the status quo. “Suddenly, the health plan might be 10 times better than it ever was, for employees and employers," says Adam. “We need more control and more holistic solutions. We need a new approach.”

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Stay tuned for Part 2 of this series: Strategic plan design and holistic implementation strategies, and watch our webinar on what employers need to do now.

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