What are the legal risks of offering Ozempic as an employee benefit?

'It gets tricky fast': benefits lawyer outlines legal pitfalls of HR offering – or not offering – weight loss drugs in Canada

What are the legal risks of offering Ozempic as an employee benefit?

As Canadian employers contemplate the cost of adding Ozempic and other GLP-1 drugs to their employee benefits programs, an employment lawyer has a warning: excluding the drugs to cut costs may be tempting, but it could also open them up to human rights discrimination claims.   

“Ozempic and the weight loss ones are at a risk of creating cost issues, not just because of their per unit cost, but because … we now have this sort of floodgate concern,” says Natasha Monkman, partner at Hicks Morley in Toronto.

“Whether or not that actually turns out to be a legitimate concern, I think, is going to vary by your employer [and] workplace demographic.”

Recent studies highlight the growing adoption of weight-loss medications by employers; a 2024 survey by Dalhousie University’s Agri-Food Analytics Lab found that about 10% of Canadians (up to 1.4 million) have used Ozempic-type drugs to manage Type 2 diabetes and weight loss.

According to a Mercer survey, 44% of U.S. employers with 500 or more employees covered weight-loss drugs in 2024, up from 41% in 2023. Among employers with over 20,000 employees, 64% offered coverage, compared to 56% the previous year.

Legal implications of weight loss drug exclusions

According to Monkman, a significant legal concern for Canadian employers offering GLP-1 drugs can arise when they start wanting to cut costs.

Under Canadian human rights laws, denying access to medications that treat conditions like obesity could result in discrimination claims, she says.

"There are risks of targeting drugs for exclusion, because if that drug is treating a particular type of condition, then there's risk of a claim from somebody who is affected by that condition," says Monkman.

Obesity, in certain cases, is recognized as a disability under Canadian law; as Monkman points out, the Ontario Human Rights Commission has identified that making distinctions or discriminating based on weight, particularly where someone is obese, can be found to be discrimination.

While not all weight-related distinctions are discriminatory, excluding drugs like Ozempic from benefits plans could be seen as indirect discrimination, she says.

Employers must also consider case law; although there have not been such discrimination claims in regards to GLP-1 drugs, there is similar precedent, for example, when medical marijuana first came to be widely, and legally, accepted as a treatment for various ailments, says Monkman.

“The risks that we do see as drugs evolve, as their uses evolve more and more … if you target a particular drug that treats particular conditions, there's always going to be that risk from one individual saying, ‘By targeting that drug, you've now discriminated against me based on my condition.”

Cost-containment strategies and collective agreements

The financial implications of providing weight-loss medications are a significant concern. According to Mercer, pharmacy benefit costs increased 7.7% in 2024, after rising 8.4% in 2023, driven by the use of GLP-1 drugs.

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Source: Mercer

Prior authorization is one tool insurers and employers use to manage costs. This process requires employees to demonstrate that alternative treatments have failed before accessing certain medications. However, prior authorization must be implemented cautiously, says Monkman.

"Not every benefit plan utilizes prior authorization. Some plans don't have it because their collective agreement, for example, contains language that prevents the implementation of it," she says.

"Sometimes the employer doesn't realize that it's contrary to the collective agreement. Sometimes it might be that the insurer is sort of proactively engaging in the utilization of the process. And where that happens, the union may grieve,” Monkman notes.

“Or sometimes, you've moved from one insurer to a new insurer, and the employer hasn't realized that the new insurers are implementing these processes.”

Wellness programs: a holistic approach

Broad cost-containment measures, such as annual or lifetime caps on drug spending, are preferable to targeting specific drugs, Monkman advises. These strategies avoid singling out particular conditions or medications, reducing the risk of discrimination claims.

“You have to be prudent when thinking about what you're going to cut or control your costs, and you really need to take a holistic look at your program,” she notes. “Try to implement cost-containment measures that are going to be equitable across the program.”

Wellness programs have gained traction as a complementary approach to improving employee health and managing costs, such as those offered through Employee Assistance Programs (EAPs); while the benefits of wellness programs might not be immediately apparent in the form of few GLP-1 claims, there are fewer tangible and long-term benefits, Monkman observes.

“There are a lot of employers that have started making considerable programs available to their employees on things like overall wellness, that I think are worth it,” she notes.

“There's considerable ROI that employers do get when they look at wellness programs alongside of their benefit coverage.”

Employee benefit communications

However, she cautions employers to be aware of their internal communication about wellness programs, ensuring they are not seen to be targeting any particular groups of employees.

“Employers have to obviously be careful about ever being seen to be giving advice on anything at any time, and certainly not about health treatment,” says Monkman.

“But I think that this is where it intersects with whether or not it's appropriate for employers to be offering wellness programs, and to think about what wellness programs they may be making available to employees and making sure that you're not targeting anybody … and that you're communicating broadly across all of your employees.”

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