2021 Plan Design Survey: Pharmacy Strategy and Design

In comparing employer actions in 2019 to those taken in 2020, it’s clear that many employers made changes to their pharmacy benefit for the 2020 plan year.


August 18, 2020

The 2021 Large Employers' Health Care Strategy and Plan Design Survey solicited information about employer approaches to health care and benefits in the midst of the COVID-19 pandemic, providing a window into leading ways that employers are addressing COVID through their benefit plans, programs and overall workforce strategy outlook.

Looking for the latest data?

Check out our 2024 Large Employer Health Care Strategy Survey, released in August 2023.

Key Takeaways

  • When it comes to employer concerns about pharmacy benefits, high-cost therapies (i.e., $1 million or more) top the list for the second year in a row.
  • Employers continue to look to plan management tactics to control specialty spend, with prior authorization as the most common strategy (for treatments that fall under both the medical and pharmacy benefit design).
  • Programs to implement point-of-sale rebates and consumer coupon cards are on the rise, with many employers putting them into place in 2020 and 2021.

Pharmacy Benefit Concerns

In comparing employer actions in 2019 to those taken in 2020, it’s clear that many employers made changes to their pharmacy benefit for the 2020 plan year. For a number of years, employers have continued to see escalating price tags for newer medications, some over $1 million. Action needed to be taken to address high-cost medications, as well as challenges in the pharmacy supply chain that could raise employer and employee costs.

When asked to state their top concerns about pharmacy benefits, more employers selected the impact of costly treatments than any other issue, with two-thirds saying they are very concerned, followed by the impact of coupons on consumer behavior and what happens when they are applied to the deductible. This part of the report will dive into tactics being implemented to alleviate these concerns.

Large Employers’ Top Pharmacy Benefit Concerns, 2020 
Figure 4.1: Large Employers’ Top Pharmacy Benefit Concerns, 2020

Addressing High-cost Therapies and Staying The Course with Specialty Pharmaceuticals

High-cost therapies are available to treat chronic, rare and/or genetic diseases. These therapies are highly advanced products that may deliver curative or near curative results and are being developed for a wide range of diseases.

As a result of pipeline growth for these therapies, large employers are increasingly focused on the impact of even one or two cases on their overall annual health care budgets. For example, Zolgensma, a one-time injection to treat spinal muscular atrophy in young pediatric patients, was launched in May 2019 at a $2.1M price tag, sending employers into action to find ways to provide coverage for the novel therapy.

The below table shows how employers rank interest in five different strategies to mitigate the impact of high-cost therapies. In 2020, an increasing proportion of employers will delay the inclusion of new treatments from their formulary at launch (e.g., for 6 months) to enable the pharmacy benefit manager (PBM) or health plan to better determine the treatment’s efficacy and safety. The next two options—stop-loss insurance and outcomes-based contracting—aren’t as popular an approach but are being considered heavily for 2022/2023.

Strategy 2019  2020 2021  2022-2033 (Considering)


 44% 57%

Delay inclusion of new treatments from formulary at the launch date for a predetermined amount of time or when the PBM can determine efficacy/safety.

Contract directly with PBM or manufacturer to pay for a specific drug based on outcomes and/or use within a specific population.        
Purchasing insurance for a specific drug to help offset financial risk beyond a certain threshold (e.g., $1M).         
Pay a fixed price based on the number of members in the plan to make the pharmacy costs more consistent.        
For specific high-cost drugs, the employer is able to pay for the treatment over time, instead of a lump sum when the claim hits their plan.        

Though million-dollar therapies have sparked urgent focus on enhanced benefit design management for a sustainable coverage environment, large employers continue to pursue tactics to lower overall spend on traditional specialty drugs – a significant driver of pharmacy spend for a self-insured employer. Underscoring specialty benefit design management as a priority, most (9 in 10) employers are partnering with the specialty side of the PBM and health plan, while 9% are contracting directly with a vendor independent of their PBM.

Again this year, the most common techniques to manage specialty pharmacy are prior authorization under the pharmacy benefit (88%) and medical benefit (53%). Figure 4.2 notes other common techniques, including site-of-care management (51%) and approving a limited initial supply of new medications (46%).

Large Employers’ Management of Specialty Benefits, 2021 
Figure 4.2: Large Employers’ Management of Specialty Benefits, 2021

Additionally, large employers are implementing specific tactics to encourage the use of biosimilars, where available. Apart from placing biosimilars on a preferred specialty tier (31%), employers are participating in education campaigns to communicate the benefits of biosimilars (20%), creating distinct lower cost tiers for biosimilars (4%), or deploying some other strategy (7%).

Coupons and Patient Assistance Programs

Manufacturer coupons and patient assistance programs aim to offset out-of-pocket costs when obtaining medications. However, these resources disable cost-sharing terms and conditions in formularies and undermine plan management.

Recognizing the importance of protecting the pharmacy plan design to reduce prescription drug costs, employers can deploy a variety of methods to counter coupons. In fact, 60% of surveyed employers had at least one tactic in place in 2020; that number will grow by 15 percentage points in 2021.

Figure 4.3 illustrates the most common strategies employers have put in place to address copay coupons, including reviewing coupon utilization, which 56% of employers will do in 2021. Following that, employers can implement a copay card accumulator program (49% will do so) or limit coverage of a couponed medication where there is a lower cost alternate available (12%). Lastly, 16% of employers will have an education program in place to inform employees about manufacturer coupons.

Large Employers’ Tactics to Address Coupon Cards, 2020-2023 
Figure 4.3: Large Employers’ Tactics to Address Coupon Cards, 2020-2023

Manufacturer Rebates

Employers struggle to reconcile the role of manufacturer rebates in pharmacy benefit management. With no meaningful alternatives to the rebate-driven contracting model, large employers have continued to implement point-of-sale (POS) rebate programs. By passing the rebate directly to the consumer at the POS, employers share the drug-specific rebate with the employee taking the rebated medication, instead of applying those dollars to lower overall premiums.

In 2019, 18% had a program in place to pass the rebate directly to the consumer at the POS; this number will rise to 31% in 2021, with another 31% considering this approach for implementation in 2022-23.

Large Employers’ Point-of-Sale Rebate Programs, 2020-2023 
Figure 4.4: Large Employers’ Point-of-Sale Rebate Programs, 2020-2023

More Topics

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  1. Pharmacy Benefit Concerns
  2. Addressing High-cost Therapies and Staying The Course with Specialty Pharmaceuticals
  3. Coupons and Patient Assistance Programs
  4. Manufacturer Rebates