GLP-1 medications (such as semaglutide) are among the fastest-growing costs in health plans, an estimated ~14% of 2026 drug spend, often more than $1,000 a month before rebates. Employers are deciding whether to cover them for weight loss and, if so, how to manage utilization.
Prescription Drugs
Pharmacy benefits work differently from medical coverage, with formularies, tiers, and PBMs. These FAQs explain how drug coverage and costs work.
What is a PBM (pharmacy benefit manager)?
A pharmacy benefit manager administers the drug side of a health plan, building the formulary, negotiating with drug manufacturers and pharmacies, and processing pharmacy claims. PBMs strongly influence which drugs are covered and at what cost, and their pricing has drawn scrutiny for being opaque.
What is a drug formulary, and what are tiers?
A formulary is the list of prescription drugs a plan covers, organized into tiers. Lower tiers (generics) cost you the least; higher tiers (preferred brand, non-preferred brand, and specialty) cost more. Placement reflects cost and clinical value, and formularies change over time.
What is step therapy (“fail first”)?
Step therapy requires you to try a lower-cost drug first and show it didn’t work (or isn’t appropriate) before the plan will cover a more expensive alternative. It’s a utilization-management tool, and your prescriber can request an exception when stepping through isn’t medically appropriate.