Addressing Prescription Drug Costs: Options for Employers and Employees
Prescription drugs are a growing share of health plan spending. You can lower costs without cutting value by using a clearer drug list, smarter pharmacy contracts, and better member support. Employees can save too—by asking about lower-cost options, using plan tools, and taking advantage of manufacturer programs.
Recent industry reporting points to three big factors for rising healthcare premiums: higher provider prices, more care utilization, and rising pharmacy spend. Within pharmacy, the trend is shaped by several factors: fast adoption of GLP-1s for diabetes and weight management, high-cost specialty drugs, uneven biosimilar uptake, and growing scrutiny of pharmacy benefit manager (PBM) practices. Employers that modernize PBM terms, tighten formulary strategy, and improve member support can reduce avoidable spend without cutting value.
Why prescription drug costs keep rising
- A few high-priced drugs drive a lot of spend. New therapies can be life-changing, but they’re expensive.
- Specialty medicines are a bigger piece of the pie. These include treatments for cancer, autoimmune disease, and rare conditions.
- GLP-1s are more common. Originally used for type 2 diabetes, many plans are also seeing demand for weight-management indications.
Pharmacy contracts can be hard to read. Without clear pricing and reporting from your pharmacy benefit manager (PBM), it’s tough to spot waste.
- Where care happens matters. The same infusion can cost far less outside a hospital outpatient setting.
Key definitions
- PBM (Pharmacy Benefit Manager): The company that manages your drug benefit—negotiates prices, sets the drug list, and processes claims.
- Formulary (drug list): The list of medicines your plan covers and how much they cost members.
- Specialty drugs: High-cost medicines that often need special handling or monitoring.
- Biosimilar: A near-copy of a complex biologic medicine that can be less expensive, similar to a generic for traditional drugs.
- GLP-1: A class of medicines that help control blood sugar and appetite; some are also approved for chronic weight management.
What employers can do, that works
- Make your PBM contract transparent
Use a pricing model where you can see what the plan actually pays, keep the right to audit, and ask for clear monthly reports on which drugs are driving spend and where they’re being filled. - Keep your drug list (formulary) fresh
Encourage lower-cost medicines that deliver the same clinical results. Use “try-first” rules and sensible quantity limits when appropriate, and review the list each quarter as new evidence and biosimilars arrive. - Take advantage of biosimilars
When a lower-cost biosimilar is clinically appropriate, make it easy to choose—align benefits across medical and pharmacy, lower member out-of-pocket where you can, and educate prescribers and employees. - Choose the right place of care for specialty drugs
When it’s safe and appropriate, move infusions and injections from hospital outpatient settings to ambulatory centers, home infusion, or specialty pharmacy administration. The same therapy can cost far less depending on the setting. - Manage GLP-1s with clear guardrails
Set straightforward eligibility by condition (diabetes vs. weight management). Use prior authorization, time-limited trials, and 90/180-day check-ins tied to adherence and results. Consider manufacturer self-pay options for eligible members where it reduces plan costs. - Plan for one-time, high-cost therapies
Coordinate your stop-loss coverage, prior authorization, and case management so a single claim doesn’t overwhelm the plan year.
Use the best fulfillment channel—and keep refills on track
Steer prescriptions to the most cost-effective option (retail, mail, specialty, or manufacturer programs). Encourage 90-day supplies for maintenance meds, and monitor early refills, dose increases, and discontinuations so you can act quickly.
What employees can do and how employers can help
- Ask about alternatives. Talk with your clinician about generics, biosimilars, or lower-cost options when they’re appropriate.
- Compare pharmacies. Prices can vary; many plans offer tools to check costs before you fill.
- Use 90-day or mail-order for maintenance meds. It can be cheaper and more convenient.
- Leverage manufacturer support. Copay cards and patient-assistance programs may reduce out-of-pocket costs.
- Know your benefits. Understand prior authorization steps, specialty pharmacy requirements, and best locations to go for the treatments you need.
- Use FSA/HSA dollars. Pre-tax accounts can help cover eligible prescription costs.
Control your prescription drug costs—contact OPOC at care@opoc.us or 800.724.8802.
FAQs
What is a PBM and why does it matter?
A PBM manages your drug benefit and sets many of the rules that affect cost. Transparent pricing and clear reporting make it easier to find savings.
What is a biosimilar?
It’s a highly similar version of a complex biologic medicine. When clinically appropriate, biosimilars can offer the same outcomes at a lower cost.
Are GLP-1 medicines covered for weight loss?
Coverage varies by employer. Many plans cover GLP-1s for type 2 diabetes; some also cover them for chronic weight management with criteria such as prior authorization, trial periods, and progress checks.
Do mail-order and 90-day fills really save money?
Often, yes—especially for long-term medicines. They can reduce copays and improve adherence by cutting down on pharmacy trips.
Why does the place of care change the price?
Hospital outpatient settings typically have higher facility fees. When it’s clinically safe, using home infusion, ambulatory centers, or specialty pharmacy administration can reduce cost.