Pharmacy Benefit Trends: What Employers Are Doing About Drug Costs

Pharmacy costs continue their upward march, driven by specialty drugs and the GLP-1 phenomenon. Here's how employers are structuring pharmacy benefits to manage costs while maintaining access.

The Cost Landscape

Pharmacy now represents 25-30% of total healthcare spend for many employers—up from under 20% a decade ago. The drivers:

Specialty pharmacy dominance: Despite representing less than 2% of prescriptions, specialty drugs account for 50%+ of pharmacy spend.

GLP-1 explosion: Ozempic, Wegovy, Mounjaro, and related medications have created an entirely new cost category. Employers covering these drugs are seeing significant impacts.

Biosimilar opportunity: Where biosimilars are available, they offer savings—but adoption remains uneven.

Formulary Strategies

Employers are taking varied approaches to formulary management:

Closed formularies: More employers are moving to closed or tightly managed formularies, particularly for drug categories with multiple therapeutic alternatives.

Step therapy requirements: Requiring patients to try lower-cost alternatives before accessing expensive options is increasingly common.

Prior authorization expansion: PA requirements, once reserved for specialty drugs, are expanding to other high-cost categories.

GLP-1 Decisions

The biggest pharmacy decision for many employers this year: how to handle GLP-1s.

Coverage with management (~55%): Most employers are covering GLP-1s but with requirements—prior authorization, step therapy, quantity limits, or indication restrictions.

Full exclusion (~20%): Some employers have excluded GLP-1s for weight loss entirely, covering only for diabetes.

Full coverage (~15%): A minority offer unrestricted coverage, accepting the cost impact.

Case-by-case (~10%): Some haven't formalized policy and handle requests individually.

Specialty Pharmacy Management

Beyond formulary, employers are managing specialty costs through:

Site of care optimization: Steering infusions away from hospital outpatient settings to lower-cost sites (physician offices, home infusion, ambulatory infusion centers).

Specialty pharmacy carve-out: Moving specialty management to specialized vendors outside the traditional PBM relationship.

Biosimilar mandates: Requiring biosimilar use when available, rather than treating it as one option among many.

Looking Ahead

Pharmacy cost management will remain a priority. New specialty drugs continue to launch. GLP-1 utilization is likely to grow. Employers need strategies that balance cost control with appropriate access.

The employers who benchmark their pharmacy designs and stay current on peer approaches will be best positioned to navigate this evolving landscape.