Financial Viability of GLP-1 Medications Team 23544 · MTFC 2025–26
Modeling the Future Challenge · 2025–26 · National Award

Financial Viability of GLP‑1 Medications

A Monte Carlo simulation framework for the actuarial risk analysis of semaglutide coverage

Kristen Kay · Payton Hanks · Laura Kay · Aarit Atreja Modeling the Future Challenge — Team 23544
Team 23544  ·  Submitted March 2, 2026  ·  Pharmacoeconomics & Actuarial Risk
Abstract

Cardiovascular disease is the leading cause of death in the United States, yet broader insurance coverage of GLP-1 receptor agonists such as semaglutide—priced near $12,000 per year—poses a material financial risk to payers. We constructed a three-stage Monte Carlo simulation drawing on three primary data sources: a nationally representative NHANES cohort (n = 4,429) for baseline PREVENT inputs, 835 MEPS inpatient events for a log-normal hospitalization-cost distribution, and clinical-trial literature for stochastic treatment-effect modeling. Across 1,000 ten-year simulations per patient, avoided ASCVD hospitalizations alone (≤ $500 per patient over ten years) were insufficient to offset drug cost at any risk level. Incorporating a scale factor for broader GLP-1 benefits, we identify two clinically meaningful subgroups—high-risk (PREVENT ≥ 20%, ~2%) and moderate-risk (10–20%, ~13%)—where total savings plausibly justify coverage. We recommend a tiered framework with a dynamic threshold that expands eligibility as drug prices decline.

Keywords: GLP-1 · semaglutide · PREVENT score · Monte Carlo simulation · actuarial risk · ASCVD · health economics
2,500
Americans die from cardiovascular disease each day1

1The Core Tension

GLP-1 medications demonstrably reduce cardiovascular risk, but at roughly $12,000 per year the expected savings from avoided hospitalizations alone cannot justify universal coverage. 2 This project builds the actuarial framework needed to determine who should be covered, and why—using Monte Carlo simulation, bootstrap uncertainty estimation, and a tiered PREVENT-score recommendation that concentrates expenditure on the highest-return patients.

The central financial risk is structural: our PREVENT-score distribution shows that roughly 85% of BMI-eligible patients fall into the low-risk category, generating minimal return on a $12,000 annual investment. The gap between the high cost of the drug and the modest projected ASCVD savings of $200–$500 per patient over ten years is the primary driver of insurer financial exposure. The three quantities below frame that trade-off.

$12,000
Annual cost to insurers
After rebates and discounts; gross list price $16,200/yr.
$200–500
10-yr ASCVD savings / patient
From avoided hospitalizations, varying by baseline PREVENT.
24–60×
Scale-factor gap to close
How much larger total savings must be than ASCVD savings alone.
Box 1. The central trade-off in three numbers. The scale factor quantifies the multiple by which non-cardiovascular GLP-1 benefits must exceed avoided-hospitalization savings for coverage to break even.

2Data & Methods

Three primary data sources, each chosen for reliability, sample size, and relevance, integrate into a single risk model.

i

Patient Cohort

NHANES 2021–2023

n = 4,429 valid patients (from 6,615; excluded missing values, ages outside 30–79, and pregnant individuals).

BMI, SBP, HDL-C, total cholesterol, eGFR (computed from serum creatinine), smoking, statin use, diabetes history, antihypertensive use.

Baseline PREVENT inputs for a nationally representative cohort.

ii

Hospitalization Costs

MEPS 2019–2023

n = 835 ASCVD inpatient events; pooled across five years, adjusted to 2026 dollars via CPI-M.

ICD-10 I20–I25, I60–I69, I70–I74. Log-normal fit (MLE): μ = 9.518, σ = 1.124; mean $25,676, median $16,633.

Cost distribution for any single ASCVD event.

iii

Semaglutide Effects

Clinical Literature

STEP 1 (NEJM, n~2,000), SUSTAIN 6 & PIONEER 6 pooled (eGFR), BMI study (n=8,857 vs 35,428), SBP meta-analysis (27,000 participants, 29 trials).

BMI effects stratified across four class bins (<29.9, 30–34.9, 35–39.9, 40+).

Normal distributions for treatment-effect modification.

Figure 1. Data architecture. Each source maps to a distinct dimension of the actuarial model.
Table 1. Alignment of data sources with the Actuarial Process Guide framework.
Data SourceCharacterize OutcomesSeverity / RangeFrequency / Likelihood
NHANES (Table 1)
MEPS (Table 2)
Research papers (Table 3)

3Semaglutide Treatment Effects

Mean changes and standard deviations derived from clinical-trial distributions, applied stochastically across all 4,429 patients.

Table 2. Modeled semaglutide effects on PREVENT input variables. Direction indicates the cardiovascular consequence, not the sign of the change.
VariableMean ChangeStd. Dev.Direction
Blood Pressure−2.31 mmHg±0.41↓ protective
Total Cholesterol−3.3 mg/dL±0.31↓ protective
HDL Cholesterol+4.9 mg/dL±0.31↑ beneficial
eGFR−0.97 mL/min±0.11≈ neutral*
BMI (<29.9)−12.2 kg/m²±8.4↓ protective
BMI (30–34.9)−16.5 kg/m²±9.2↓ protective
BMI (35–39.9)−16.5 kg/m²±8.5↓ protective
BMI (40+)−14.1 kg/m²±8.4↓ protective

* Modest eGFR decline is expected and within acceptable physiological range; it does not represent kidney harm at this magnitude.

4The Simulation

A three-stage Monte Carlo procedure: 1,000 independent ten-year simulations per patient, across 4,429 patients, integrating treatment uncertainty, event timing, and hospitalization cost.

Stage 1 · Treatment

PREVENT Modification

For each patient, sample 1,000 treatment effects from the Table 2 normal distributions, apply to baseline variables, and compute 1,000 post-treatment PREVENT scores.

Stage 2 · Events

Dynamic Hazard

Convert PREVENT to a Poisson baseline hazard. Simulate the ten-year timeline at Δt = 0.01 yr, applying a spike–decay recurrence model after each event and a mortality hazard that terminates accumulation.

Stage 3 · Cost

Log-Normal Cost

Each simulated event draws a cost from LogNormal(μ=9.518, σ=1.124), fitted to 835 MEPS records. Costs are summed per patient per simulation.

Figure 2. The three-stage simulation pipeline. Output of each stage feeds the next.

4.1Event & mortality hazard

The baseline instantaneous hazard is derived from the ten-year cumulative PREVENT probability R; the probability of an event over an interval x follows from the survival function; and post-event risk is elevated by a decaying spike summed over prior events.

(1)
(2)
(3)
Table 3. Fitted spike–decay parameters for the recurrence model.
ParameterSpike Magnitude SDecay Constant k
Event risk0.24090.4851
Death risk0.21570.4111

Mean squared error: 6.718 × 10⁻⁵ (event), 7.833 × 10⁻⁵ (death).

4.2Cost assignment

Each event cost is an independent draw from the MEPS-fitted log-normal distribution.

(4)

5Distribution of a Single ASCVD Cost

Log-normal fit to 835 inpatient events from MEPS 2019–2023, adjusted to 2026 dollars. μ = 9.518, σ = 1.124.

Figure 3. Probability density of a single ASCVD hospitalization cost, with median ($16,633) and mean ($25,676) marked. Pooling five survey years stabilizes estimates and excludes single-year anomalies. Zero-expenditure records were excluded, as they reflect HMO capitation, VA care, or unbilled transfers rather than true zero-cost events.

6Risk-Stratified Results

Mean ten-year ASCVD costs by risk tier, before and after semaglutide therapy. Bootstrap standard errors estimated across 1,000 resamples per PREVENT percentile range.

10%
20%
85% Low (PREVENT < 10%) 13% Moderate (10–20%) 2% High (≥ 20%)
Figure 4. Population distribution of BMI-eligible adults across PREVENT risk strata.
High Risk
PREVENT ≥ 20%
~2% of eligible adults (~5 million Americans)
Baseline 10-yr cost$8,299.72
SE ±93.85
Treated cost$7,782.84
SE ±94.02
ASCVD savings$516.88
SE ±129.90
Scale factor≤ 24
RecommendationCover immediately

Additional GLP-1 benefits plausibly close the remaining gap. A scale factor of 24 is within a defensible range.

Moderate Risk
PREVENT 10–20%
~13% of eligible adults (~32 million Americans)
Baseline 10-yr cost$3,652.73
SE ±62.93
Treated cost$3,373.09
SE ±60.70
ASCVD savings$279.64
SE ±116.10
Scale factor24–60
RecommendationCover with step therapy

Require a one-year lifestyle intervention (CDC DPP, ~$553) before authorization; reassess PREVENT and, if still ≥10%, authorize coverage.

Low Risk
PREVENT < 10%
~85% of eligible adults
Baseline 10-yr cost$1,343.26
SE ±39.08
Treated cost$1,269.94
SE ±41.83
ASCVD savings$73.32
SE ±78.50
Scale factor> 60
RecommendationDo not cover

At current pricing the scale factor exceeds 60. ASCVD savings represent under 1.7% of the benefit required to break even.

Table 4. Tiered recommendation summary.
PREVENT Score10-yr ASCVD SavingsScale FactorRecommendationPopulation
≥ 20% (High)> $500≤ 24Cover immediately2%
10–20% (Moderate)$200–50024–60Cover with step therapy13%
< 10% (Low)< $200> 60Do not cover85%

7Scale-Factor Sensitivity to Price

As drug prices fall under market competition or legislative pressure, the same framework re-identifies cost-effective populations. Adjust the annual cost to observe the effect.

Annual semaglutide cost to insurer: $12,000
$8,000Generic / IRA scenario
$12,000Current insurer cost
$16,200Gross list price
High Risk
PREVENT ≥ 20%
23.2
savings multiplied by 23.2× to break even
Moderate Risk
PREVENT 10–20%
42.9
savings multiplied by 42.9× to break even
Low Risk
PREVENT < 10%
163.7
savings multiplied by 163.7× to break even
Figure 5 (interactive). Break-even scale factor by risk tier as a function of annual drug cost. The dynamic threshold expands eligibility automatically as prices decline (tirzepatide, survodutide, Inflation Reduction Act negotiation)—no new analysis required.

8The Tiered Coverage Framework

A replicable, actuarially sound decision rule for insurers evaluating semaglutide coverage.

Patient is BMI-eligible for GLP-1 consideration
Calculate PREVENT ScoreAHA PREVENT calculator
PREVENT ≥ 20%
Authorize coverage immediately[2% of population]
PREVENT 10–20%
Enroll in CDC DPP$553/participant — 20× cheaper than one year of semaglutide
Reassess at 12 months
still ≥ 10%
Authorize drug coverage[+13% of population]
now < 10%
Redirect to lifestyle pathway
PREVENT < 10%
Lifestyle only; no coverage at current pricing[85% of population]
Figure 6. Tiered coverage decision rule with a 12-month step-therapy checkpoint for the moderate-risk tier.

9Beyond ASCVD: Supporting Evidence

Semaglutide generates savings across disease pathways beyond cardiovascular hospitalization—the empirical basis for the scale factor.

9.1Type 2 Diabetes Prevention+
  • The ADA estimates $12,000/year in excess medical spending per T2DM patient (insulin, monitors, inpatient services, prescriptions).
  • STEP 1: 84.1% of prediabetic patients achieved normoglycemia with semaglutide vs. 47.8% on placebo at week 68.
  • STEP 3: 89.5% vs. 55.0% placebo (p < 0.0001).
  • Net advantage: ≈ 36% greater probability of avoiding T2DM vs. placebo (averaging STEP 1 and STEP 3).
  • Preventing just three years of T2DM ⇒ 0.36 × $36,000 = $12,960 expected savings—exceeding the full annual drug cost and closing the high-risk gap on its own.
9.2Osteoarthritis & Joint Replacement+
  • Obesity accelerates cartilage degradation and the need for total knee/hip arthroplasty through mechanical loading.
  • Total knee or hip replacement costs $30,000–50,000 per joint.
  • WOMAC pain score (0–100, higher = worse): semaglutide −41.7 vs. placebo −27.5 (p < 0.001), double-blind RCT.
  • SF-36 physical-function score: +12.0 vs. +6.5 placebo (p < 0.001), a validated HRQoL instrument.
  • Morbid obesity also raises post-surgical infection rates, further compounding hospitalization costs.

10Policy Impact

The framework's reach, and why resolving insurer uncertainty matters.

~0
in the high-risk tier (PREVENT ≥ 20%)
~0
in the moderate-risk tier (10–20%)
~0
total who could gain access under this framework
Policy Implication

Lives are lost not only when treatments fail, but when proven treatments are never authorized. The primary barrier to semaglutide access in the non-diabetic population is insurer financial uncertainty. A tiered PREVENT-score framework resolves that uncertainty with a replicable, actuarially sound rule—and as prices fall under market and legislative pressure, the dynamic scale factor automatically expands eligibility, saving more lives each year without a new analysis.

11Modeling Assumptions

The principal simplifying assumptions of the model, with justifications.

View the ten major assumptions+
Normal distributions for treatment effects. Trials report mean changes and standard deviations; Gaussian sampling is statistically appropriate for Monte Carlo simulation.
Independence of treatment effects across variables. Published data lack joint distribution parameters; independence is a necessary simplification.
Effects independent of baseline (except BMI stratification). Individual-level modification data are unavailable; homogeneity across baseline levels is assumed.
Treatment effects persist over ten years. Long-term persistence data are limited; PREVENT's ten-year estimate already incorporates some future-health uncertainty.
Poisson baseline hazard from PREVENT. PREVENT gives cumulative ten-year probability; conversion to an instantaneous rate enables time-dependent simulation.
Spike–decay recurrence model. Risk is highest immediately after an event then declines; exponential spike–decay captures this pattern.
Log-normal cost distribution. Healthcare costs are right-skewed with heavy tails; log-normal is the standard parametric choice.
1,000 Monte Carlo trials per patient. Sufficient to stabilize mean estimates while remaining computationally feasible.
NHANES representative within each PREVENT percentile. NHANES is nationally representative; bootstrap resampling estimates sensitivity to cohort composition.
Costs constant in real terms over ten years. Both scenarios share the same inflation environment; differential inflation is not modeled.

Notes & Data Sources

  1. Cardiovascular disease mortality, ~2,500 deaths/day — Centers for Disease Control and Prevention, National Center for Health Statistics.
  2. NHANES 2021–2023, National Health and Nutrition Examination Survey (CDC/NCHS); cohort n = 4,429.
  3. MEPS 2019–2023, Medical Expenditure Panel Survey (AHRQ); 835 ASCVD inpatient events, ICD-10 I20–I25, I60–I69, I70–I74.
  4. STEP 1 Trial, New England Journal of Medicine; SUSTAIN 6 & PIONEER 6 pooled analysis; BMI outcomes study (n = 8,857 vs 35,428); SBP meta-analysis (29 trials, 27,000 participants).
  5. AHA PREVENT risk calculator — American Heart Association, professional.heart.org.