September 10, 2024

According to Business Group on Health’s 2025 Large Employer Health Care Strategy Survey, pharmacy expenses now make up 27% of surveyed employers’ total health care spend in the U.S. As a result, employers are seeking greater transparency in pricing and contract terms, along with effective strategies to reduce waste and opacity and improve medication affordability. On September 10, 2024, more than 60 employers gathered to share insights and evolving plans to manage pharmacy costs and drug utilization—key areas of focus in today's changing health care environment. The discussion also covered the rising financial impact of GLP-1 medications, high-cost cell and gene therapies (CGTs) and cancer treatments.

Introduction: Ongoing Challenges

Throughout the discussion, employers detailed the various challenges they face in the pharmacy space. These include rising prescription and specialty drug costs, along with a lack of transparency and opacity of pharmacy benefit manager (PBM) practices and rebate sources. The fast adoption of expensive, new anti-obesity medications has amplified sustainability and affordability concerns, especially with the looming financial impact of CGTs and the expenses anticipated from new medications in the oncology therapy pipeline. Given the circumstances, employers are considering and/or already implementing a variety of approaches, including exploring biosimilar adoption, requiring participation in evidence-based programs such as lifestyle and weight management programs and other coverage strategies aimed to ensure the value of their pharmacy benefit.

The following sections provide additional details about methods employers are looking at to combat these ongoing challenges.

Utilization and Cost Management

Many employers are considering and implementing strategic plan design tweaks in attempts to mitigate the impact of high-cost drugs and drive appropriate utilization. Strategic considerations being explored for addressing rapidly growing GLP-1 utilization include putting utilization guardrails in place, such as requiring prior authorization, physician attestation, check-in calls and/or participation in a weight management program, to be eligible for GLP-1 treatment. Some employers questioned the effectiveness of weight management programs given that behavior change can be difficult to achieve and maintain. Moreover, employers recognize that managing the cost and utilization of GLP-1s is just one aspect of a comprehensive health and well-being strategy; therefore, they must be looked at in tandem with other priorities when making plan design changes.

Pooling arrangements are another cost-saving strategy several employers on the call are exploring to manage the impact of CGTs. Some employers mentioned that they’re considering approaches akin to stop-loss to address CGT need, while others expressed organizational opposition to implementing such an approach.

Effective Vendor Relationships

Several employers are reconsidering their current approaches, including an even greater focus on negotiating pricing for some drugs and implementing innovative and more transparent vendor and plan solutions. Some of the potential solutions employers mentioned include Rightway, Truveris, TrueCost, Mark Cuban Cost Plus Drug Company and Free Market Health.

Multiple employers on the call also shared that they are looking for third-party copay maximizer and accumulator programs (e.g., Pillar Rx, Prudent Rx).

For CGTs, employers discussed obtaining risk exposure and risk prevalence reporting from carrier partners in order to better anticipate pharmacy trends.

Looking Ahead

Despite persisting cost challenges in the pharmacy space—and just about everywhere else—employers are taking proactive steps to ensure that costs are not unduly passed on to employees. Likewise, they are staying abreast of emerging trends and cost management techniques to manage plan costs.

Related Business Group on Health Resources

• Prescription Drug Pricing and Pharmaceutical Supply Chain Reform Policy Position Statement
• Taking Action on Cancer
• 2025 Employer Health Care Strategy Survey

More Topics

Resource Cost Management Pharmacy Plan Design & Administration