Larkin v. CVS Caremark: What This GLP-1 Case Means for Self-Funded Plans

By: Naga Vivekanandan, Esq.

Those in the healthcare space, or generally anyone who uses social media, has likely heard a lot of buzz about GLP-1 medications lately. Originally developed for diabetes treatment, drugs like Ozempic, Wegovy, and Mounjaro have become incredibly popular for weight loss. They are surfacing in news articles, celebrity interviews, and lunchroom conversations, and many employees are asking their plans to cover them. When a drug becomes both medically and culturally significant, costs tend to rise quickly. That’s exactly what has happened here, and both plan sponsors and pharmacy benefit managers (PBMs) have been trying to figure out how to manage the growing demand. This brings us to the case drawing attention, Larkin v. CVS Caremark.

This case explores who gets to decide how GLP-1 medications are covered and dispensed. Is it the doctor who prescribes the medication? Is it the PBM that oversees formulary access and utilization rules? Or is it the state, which may try to step in to protect patient access? As usual in health plan administration, the answer is layered and not entirely straightforward. But the way this question gets resolved will matter quite a bit for self-funded plans.

In Larkin v. CVS Caremark, the plaintiffs argue that CVS Caremark (“Caremark”), CVS Health’s PBM, has prior authorization requirements and formulary controls which make GLP-1 medications too difficult to access, even when a provider prescribes them. Caremark, for its part, uses tools like clinical criteria and utilization management to ensure the drugs are being used appropriately, generally meaning for FDA-approved purposes, such as diabetes treatment, or for weight loss when certain eligibility requirements are met. PBMs also frequently use step therapy, encouraging patients to start with lifestyle interventions and nutrition support before receiving GLP-1 medications. The plaintiffs argue that these controls are overly restrictive and prevent patients from getting needed care. Meanwhile Caremark argues that these controls are necessary both to prevent inappropriate use and to protect health plans from unsustainable cost spikes. So the case becomes less about any one GLP-1 drug and more about who has the authority to balance access against affordability.

Self-funded plans have been wrestling with GLP-1s long before this lawsuit. These medications can cost anywhere from $10,000 to $16,000 per person per year. When many members want them, or when providers prescribe them broadly, plan costs can rise quickly. Many plans already use some combination of eligibility criteria, documentation requirements, step therapy, or exclusions. Some plans cover GLP-1s only when used to treat diabetes. Others cover them for weight management only if the person meets clear clinical criteria, such as documented obesity and participation in a structured weight-management program. Others exclude them for weight loss entirely. All of these approaches rely on the ability to enforce clinical criteria through the PBM. If the result of Larkin limits how much PBMs can manage GLP-1 utilization, many plans may lose key tools they currently rely on.

This makes the case especially relevant to self-funded plan sponsors. The core issue is how much flexibility they will continue to have in designing benefits based on medical need, cost, and clinical evidence. Access and affordability must be balanced carefully. Plan sponsors want to support members’ health goals, but they also have a responsibility to keep the plan financially sustainable. The best way to handle this balance is for plans to document their coverage rules clearly. If your plan covers GLP-1s, say when and why. If your plan excludes GLP-1s for weight loss, explain that the decision is based on clinical and cost considerations. If step therapy is required, describe the steps and provide support options, such as nutrition counseling or weight management programs. Clear communication helps ensure members understand the reasoning behind coverage rules and reduces frustration or complaints.

As this case continues, plans should review their current GLP-1 language to make sure it matches their actual intent. They should align their criteria with established clinical guidelines, such as those published by medical associations. They should also check in with their PBM to make sure the plan and PBM are enforcing the rules consistently. And finally, plans should communicate with members in plain language. Confusion is often where disputes begin.

At the end of the day, Larkin is not about forcing plans to cover GLP-1s or preventing them from doing so. It is about determining who has the authority to make and enforce coverage rules. For plans, the takeaway is not alarm, but preparation. This is a good time to tighten plan language, align with clinical standards, and make sure your communication to members is thoughtful and clear. And yes, this may also be a good time to prepare for the next employee meeting including at least one question about Ozempic.