Group Insurance Commission warns GLP‑1 spending risks a $77M shortfall; staff to return with options in October

Valerie Sullivan, chair of the Group Insurance Commission, on Tuesday presided over a wide-ranging discussion of prescription drug spending after staff presented data showing a steep rise in GLP‑1 use and significant budget pressure.

Matt, the commission’s executive director, told members that maintaining current coverage “is really no longer viable” given the drugs’ cost and the number of people who may become eligible. He said the commission’s FY26 budget baseline is short by about $77,000,000 and that the governor has filed legislative language that — if enacted — would allow the commission to eliminate coverage for GLP‑1 drugs for weight loss midyear. “We don't yet have that authority from the legislature,” Matt said, adding that the commission would need to decide by its October meeting if authority is granted.

Catherine Moore, interim budget director, reviewed FY25 results earlier in the meeting and reminded commissioners that the GIC received $240,000,000 in supplemental funding for the main premium account; she also summarized technical accounting issues that produced a June deficit of $25,100,000 and a year‑end gap that she described as “almost $240,000,000” against appropriated funds.

Margaret (staff presenter) laid out the clinical case for GLP‑1 medications and the equity implications of coverage changes. “GLP‑1 medications are act similarly in the brain to reduce appetite and in the gut to slow gastric emptying,” she said, and noted that three medications approved for weight loss vary in efficacy: Saxenda (about a 5% reduction), Wegovy (about 15%), and ZepBound (about 21%). She added that expanded FDA indications and additional branded entrants could increase utilization and spending.

Staff presented utilization figures showing that roughly 3.5% of GIC members currently receive GLP‑1s and that aggregate GIC spending for certain GLP‑1 products topped $120,000,000 in the past year. Matt said the annual cost for a single member on these drugs can exceed $9,000 and that the GIC’s premium increase for FY26 (11.7%) reflected GLP‑1s accounting for between a quarter and a third of that rise.

Commissioners pressed for demographic detail and cost projections. Jane Edmonds and others asked for specific innovation and procurement strategies — for example, collaboration with other state purchasers, reference‑based pricing, and alternative contracting models — and requested that staff return with concrete plans to identify $77 million in mitigations. Margaret and Matt said staff are evaluating: (a) vendor‑led weight‑management programs that tie continued drug eligibility to participation, (b) eligibility‑threshold changes, (c) freezing access for new users, and (d) longer‑term procurement modifications; they cautioned that contract terms with the PBM (CVS) tie rebates to FDA‑aligned coverage and that some eligibility changes could reduce rebates and yield net losses rather than savings.

Several commissioners warned that trade‑offs will create winners and losers among stakeholders if coverage changes are pursued. Matt described the choices as “all about trade‑offs” and said staff will provide more modeling and vendor analysis ahead of the October meeting.

Next steps: staff will continue to monitor legislative activity, complete vendor interviews and rebate modeling, and return to the commission in October with quantitative options. Any midyear benefit change would require the legislature to grant authority; absent that, commissioners said they expect a full discussion of FY27–FY28 procurement strategies to pursue long‑term relief.