Generic rollout carries fine print that plan sponsors need to understand, says Canada Life’s Barb Martinez
With the arrival of generic Ozempic now coming to market, drug plan management and costs are about to get a bit more complicated.
Two generic versions of semaglutide now have Health Canada approval, with a starting price of roughly $2,000, down from about $5,500 for the brand. But for plan sponsors trying to figure out whether and how to cover these drugs, cheaper doesn't always mean simple.
At the CPBI Forum in Quebec City, Barb Martinez, national practice leader of drug benefits solutions at Canada Life highlighted the trajectory of other blockbuster drugs that have also gone generic, citing Lipitor as an example where the brand cost over $1,000 a year and the generic now sits at $79.
"The generic companies are making a profit, otherwise they wouldn't be making it," she said. “We have a lot of room to see the price go down of the GLP-1 drugs. It is more expensive to manufacture an injectable and they have to be made in sterile environments. And certainly, the research, development and marketing expenses have to be recouped for these drugs as well.”
Martinez emphasized how the generic rollout carries fine print that plan sponsors need to understand, particularly as pharmacists can only substitute the generic for patients with type 2 diabetes and not for those prescribed Ozempic for chronic kidney disease or cardiovascular disease alongside their diabetes.
"That means that your plans will not save money on generics unless it's type-2 diabetes," Martinez said, adding carriers now have to configure their systems to distinguish between indications at the pharmacy counter, adding an administrative layer that few have historically anticipated.
Still, whatever pressure plans face from the current crop of GLP-1s, Martinez warned the next wave will reset the conversation entirely. For example, Mounjaro and Zepbound aren't pure GLP-1 drugs as they combine a GLP-1 agonist with a second hormone receptor called GIP, informally dubbed GLP-2 in the market. And Martinez noted they're just the start.
Amgen, Altimmune, and Novo Nordisk all have dual-agonist drugs in development, with Novo's CagriSema being its own answer to the GLP-2 race. A triple-receptor drug called retatrutide — combining GLP-1, GIP, and glucagon — is being studied as the GLP-3 successor.
"The demand that you're hearing for everybody wants my plan to cover Mounjaro and Zepbound and Ozempic and Wegovy, that is going to be old news very soon and new demand is going to be for the newer generations of GLP-1s because at the end of the day, you get more weight loss more quickly with GLP-2s than you do with GLP-1," Martinez said.
Moreover, the bigger battleground, Martinez noted, is coupons as Novo Nordisk's advertising with Ozempic has pivoted away from the drug itself and toward the coupon program, with the manufacturer offering to cover whatever the plan won't.
Even if a plan caps reimbursement at the generic price, she noted how the brand company will pick up the difference to keep members on the original product. Wegovy is running the same play, and Eli Lilly has launched its own coupon strategy to push patients toward GLP-2 drugs over older GLP-1 options. The coupons are now the primary tool for protecting market share against generic substitution.
That dynamic feeds into the harder question of whether plans should be covering any of this. While patients lose weight, get healthier, reduce their need for cholesterol and blood pressure medications, and the downstream savings offset the upfront cost, it doesn't automatically translate to better health, particularly when the weight comes off quickly and brings its own risks. The real return on investment depends on what surrounds the drug therapy: mental health support, physical activity, nutritional changes, and the lifestyle work that determines whether the weight loss actually produces a healthier patient.
“The big question is, should we be covering all of these things? Is there good value? Are people losing weight? They’re getting healthier, they’re going to use less cholesterol drugs and blood pressure drugs and shouldn’t that offset the cost and shouldn’t it be worth to pay for all of this? That is really the big challenge. Because losing weight is the tip of the iceberg. It doesn’t mean you’re thinner if you lose weight on your own, especially if you lose a lot of weight really quickly. With these drugs, there can be many, many risks associated with that,” noted Martinez.
"It doesn't make sense to cover GLP-1 drugs when you are in a mode of trying to reduce your spending. If covering GLP-1s means you have to take away benefits somewhere else, that might be a difficult trade off," she added.
Massimo Nini, senior vice president of consulting, underwriting and actuarial services at AGA Benefit Solutions, sees obvious parallels between the obesity coverage decision and another long-running risk plan sponsors face — annual drug maximums. He acknowledged how roughly one in four Canadian plans cap drug coverage at an annual ceiling, and every consultant has lived through the scenario where a member needs a drug that blows past the limit and isn't covered by the provincial formulary. He believes the reputational fallout from those gaps is real and argued the obesity question carries the same structural risk on a different scale.
“I do think there's a huge risk there in terms of the impact on the insured and plan sponsors have a responsibility to assess that correctly," he said.
“The Canadian insurance market really needs to do a deep dive," he added, calling for cohort studies comparing outcomes between plans that cover GLP-1s for obesity and those that don't. "We have to absolutely pin down what does this mean in the long term."
For sponsors weighing obesity coverage specifically, Nini pushed for scenario testing across the full range of possible outcomes. He's seen plans where Wegovy is already the number one drug, particularly in smaller populations without a lot of other high-cost claims.
"This is where plan sponsors really matter. There's an important investment that needs to be made when you're offering obesity management," Nini said. "A lot of employees may not need that cholesterol drug or a paramedical practitioner, but they will need this component. If you're not offering [it], it's just reducing the perceived overall value and the true overall value."
Still, the clinical story for GLP-1s is also widening, Martinez emphasized, notably as GLP-1 drugs are being studied for obstructive sleep apnea, Parkinson's disease, substance use disorders, and psoriatic arthritis, much of the research now centred on anti-inflammatory effects. The FDA has already approved Zepbound for sleep apnea, and Martinez expects Health Canada to follow shortly. The substance use research draws on something patients keep reporting, particularly as the "food noise" goes quiet, and so do other cravings, from alcohol to opioids to gambling.
But the cost math gets uncomfortable fast when GLP-1s are layered onto other expensive therapies. Martinez flagged research pairing Zepbound with Taltz, a psoriatic arthritis drug that already runs $20,000 to $30,000 a year.
“It becomes exorbitantly more expensive so we really need to see that there is good clinical value," she said, emphasizing how every new indication forces plan sponsors to weigh clinical benefit against compounding price tags.
“These drugs are being studied for many, many other conditions. It takes a long time to really see what the long term value is because you need long term studies. We won’t know, even for weight loss and diabetes, what the long term return on investment is. But certainly, these drugs are going to dominate drug plans for many years to come,” added Martinez.
