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Actuarial Analysis of GLP-1 Drugs’ Impact on Medicare Costs

Background and Purpose

Glucagon-like peptide-1 (GLP-1) and similar drugs are experiencing a tremendous increase in demand, especially as their treatment uses expand. GLP-1 drugs were originally designed to help treat diabetes but now are approved by the Food and Drug Administration for treating other conditions prevalent in the U.S., such as obesity and heart disease, among others. While the demand increases, GLP-1 drugs can also cost $10,000 or more annually for a patient.

With growing demand for GLP-1 drugs coupled with their significant cost, there is interest from a variety of stakeholders to examine the relationship between the cost of using GLP-1 drugs for treating individuals and the impact on medical costs from potential health changes. Recognizing that numerous clinical / financial studies have already been conducted on GLP-1 drugs from a variety of institutions, the purpose of this effort is to approach this issue from an actuarial perspective with specific focus on individuals 65 and older covered by Medicare. To maintain a reasonable scope, this effort will analyze results from an overall Medicare program perspective and not consider impacts to individual health or drug plans.

Research Objective

The Society of Actuaries Research Institute is seeking researchers to analyze changes in medical and drug costs for Medicare beneficiaries and the program at large from the emergence of GLP-1 drugs. Primary areas of interest for this effort are:

  • How does the cost of offering GLP-1 drugs for treating various conditions compare to potential cost decreases or increases for Medicare beneficiaries factoring in potential health status changes?
  • Consider how the relationship in #1 may vary across relevant dimensions (e.g., demographics such as age, gender, geographic area, health status, etc.).

The analysis should consider different time horizons as applicable and include sensitivity testing of key modeling assumptions to illustrate the potential range of results. Given this is an emerging area, the results should include an outline of a framework for updating the analysis as new data becomes available. The deliverable will be a report summarizing the key findings and documenting methodology and assumptions.

Within the broad objective described above, respondents to the RFP may further specifically focus on various aspects of this issue. The following are examples of specific aspects and related considerations that may be addressed. Note that the list below is not meant to be exhaustive but merely examples, further acknowledging they may be approached either qualitatively and/or quantitatively.

  • Incorporate and/or describe how to control / account for the following factors in any cost modeling:
  • Drugs Covered Under Medicare
  • Supply constraints
  • Gross versus net drug costs, including rebates
  • Coverage status of Compounded drugs and effectiveness
  • Identify and quantify factors driving changes in medical and drug costs, including those that impact only GLP-1 drug’s and those that impact all drugs:
  • Cost avoidance (e.g., individuals whose condition does not progress or were diagnosed but no longer have condition and need treatment)
  • Trend bending (e.g., individuals with conditions who are using GLP-1 drugs versus those who do not; individuals who stay adherent versus those who are no longer adherent or dropped off therapy)
  • Cost increases (e.g., net cost of the drugs including non-adherence, cost of new support services introduced by the individuals going on therapy; treatment side effects)
  • Consider assumptions addressed in existing government studies, such as CBO’s recent evaluation of the cost to cover anti-obesity medications and specifically in Medicare
  • Assess the impact of the future developments for GLP-1 drugs, such as:
  • Oral versions
  • Improvements (e.g., preserving muscle mass)
  • Pricing (e.g., negotiated drugs, manufacturer discounts, potential price decreases)
  • Examine how cost impacts differ by existing and emerging conditions treated by GLP-1 drugs, such as:
  • Type 2 Diabetes
  • Weight loss/maintenance
  • Cardiovascular disease
  • Sleep apnea
  • Chronic Kidney disease
  • Liver conditions such as Metabolic Dysfunction-Associated Steatohepatitis (MASH)
  • Dementia/Alzheimer’s disease
  • Segment changes in costs by key service categories (and credible subcategories when relevant) including inpatient facility, outpatient facility, professional, prescription drugs, and other medical services
  • Consider potential differences for individuals covered under traditional fee-for-service Medicare versus Medicare Advantage

Proposal Requirements

To facilitate the evaluation of proposals, the following information should be submitted:

  • Resumes of the researcher(s), including any graduate student(s) expected to participate, indicating how their background, education and experience bear on their qualifications to undertake the research. If more than one researcher is involved, a single individual should be designated as the lead researcher and primary contact. The person submitting the proposal must be authorized to speak on behalf of all the researchers as well as for the firm or institution on whose behalf the proposal is submitted.
  • An outline of the approach to be used (e.g. literature search, model, etc.), emphasizing issues that require special consideration. Details should be given regarding the techniques to be used, collateral material to be consulted, and possible limitations of the analysis.
  • A description of the expected deliverables and any supporting data, tools or other resources to be used.
  • Cost estimates for the research, including computer time, salaries, report preparation, material costs, etc. Such estimates can be in the form of hourly rates, but in such cases, time estimates should also be included. Any guarantees as to total cost should be given and will be considered in the evaluation of the proposal. While cost will be a factor in the evaluation of the proposal, it will not necessarily be the decisive factor.

As a guide for developing project budgets, please review the Historical Project Cost Guide (see Appendix).

Please note that as a policy, the SOA Research Institute generally does not provide funding to cover academic institution overhead expenses.

  • A schedule for completion of the research, identifying key dates or time frames for research completion and report submissions. The SOA is interested in completing this project in a timely manner. Suggestions in the proposal for ensuring timely delivery, such as fee adjustments, are encouraged.
  • Other related factors that give evidence of a proposer's capabilities to perform in a superior fashion should be detailed.

Selection Process

The SOA will appoint a Project Oversight Group (POG) to oversee the project. The POG is responsible for recommending to the Section Research Committee the proposal to be funded, if any. Input from other knowledgeable individuals also may be sought, but the Section Research Committee will make the final recommendation, subject to Society of Actuaries Research Institute (SOA) leadership approval. An SOA staff research actuary will provide staff actuarial support.

Questions

Any questions regarding this RFP should be directed to research@soa.org with the subject line: Actuarial Analysis of GLP-1 Drugs’ Impact on Medicare Costs.

Notification of Intent to Submit Proposal

If you intend to submit a proposal, please email written notification by October 15, 2025 to research@soa.org with the subject line: Actuarial Analysis of GLP-1 Drugs’ Impact on Medicare Costs.

Submission of Proposal

Please email your proposal to research@soa.org with the subject line: Actuarial Analysis of GLP-1 Drugs’ Impact on Medicare Costs; proposals must be received no later than October 31, 2025. It is anticipated that all proposers will be informed of the status of their proposal by the end of Nov 2025.

Conditions

The selection of a proposal is conditioned upon and not considered final until a Letter of Agreement is executed by both the Society of Actuaries Research Institute and the researcher.

The Society of Actuaries Research Institute reserves the right to not award a contract for this research. Reasons for not awarding a contract could include, but are not limited to, a lack of acceptable proposals or a finding that insufficient funds are available. The Society of Actuaries Research Institute also reserves the right to redirect the project as is deemed advisable.

The Society of Actuaries Research Institute plans to hold the copyright to the research and to publish the results with appropriate credit given to the researcher(s).

The Society of Actuaries Research Institute may choose to seek public exposure or media attention for the research. By submitting a proposal, you agree to cooperate with the [Society of Actuaries/sponsoring entity] in publicizing or promoting the research and responding to media requests.

The Society of Actuaries may also choose to market and promote the research to members, candidates and other interested parties. You agree to perform promotional communication requested by the Society of Actuaries, which may include, but is not limited to, leading a webcast on the research, presenting the research at an SOA meeting, and/or writing an article on the research for an SOA newsletter.

Conflict of Interest

You agree to disclose any of your material business, financial and organizational interests and affiliations which are or may be construed to be reasonably related to the interest, activities and programs of the Society of Actuaries or the Society of Actuaries Research Institute.

Appendix

The cost ranges below are intended as a guide for budgeting project costs for proposals in response to SOA Research Institute Request for Proposals (RFP). Please note these figures span the 33rd to 66th percentiles for all projects as well as projects that involve a specific approach (lit review, survey, etc.). They are based on historical costs over several recent years. Expected costs for some RFPs may fall outside these ranges depending on the nature of the work and resources required for completion.

All Contracted Projects

This category includes all contracted projects that the Institute has undertaken within the last several years. The 33rd – 66th percentile project costs range is $25,000 – $50,000.

Literature Reviews

This category includes projects that involved only a literature review or the cost for the portion of a larger project that included a literature review. The 33rd – 66th percentile project costs range is $15,000 – $20,000.

Surveys

This category includes all projects that had a survey as their primary component. The 33rd-66th percentile project costs range is $28,000 – $55,000.