Key Takeaways
US towns are slashing services and stripping insurance coverage for weight-loss drugs after soaring GLP-1 costs created budget deficits as high as $50 million.
"The healthcare system is just broken," said Walter Ramsey, town administrator for Montague, Mass., after the town's school district cut five jobs and froze hiring to cover a 53% jump in healthcare costs driven by the drugs.
In western Massachusetts, the Hampshire County Group Insurance Trust saw weight-loss drugs account for 30% of its pharmacy spending in the first nine months of 2025, from less than 3% of its members. The trust, which was nearing insolvency, sent one town of 15,000 a surprise $911,000 bill, forcing cuts to school and road budgets.
The ballooning costs are forcing public employers into a difficult choice: absorb multi-million dollar deficits to pay for the popular drugs, or face union protests and employee pushback by cutting coverage. The trend could limit access for thousands of public employees and curb a key revenue stream for drugmakers like Novo Nordisk.
The budget squeeze is widespread. Fort Worth, Texas, which paid $5 million for two weight-loss drugs in just six months, has proposed shifting costs entirely to employees to help manage a $50 million shortfall. In North Attleborough, Mass., a $1.8 million deficit triggered by the drug costs led the town to limit its coverage.
While some officials hope the drugs' health benefits will eventually lower costs, the short-term financial burden is proving unsustainable for many. The Hampshire County trust ultimately voted to strip coverage for weight-loss indications. "If anything else happens, I don’t have any more options," said Michael Borg, town manager of North Attleborough.
Employee unions have protested the moves, arguing the drugs are essential health tools. "The medication did not replace healthy habits," one Delaware school-district employee wrote in testimony. "It helped make them possible." In Boston, unions and city leaders settled on an agreement that will likely limit eligibility for the drugs.
The wave of coverage cuts by public-sector employers creates a significant headwind for the long-term sales forecasts of GLP-1 drugs. Investors will be watching future earnings reports from Novo Nordisk and Eli Lilly for any commentary on the impact of these insurance changes on prescription volumes.
This article is for informational purposes only and does not constitute investment advice.
