PBMs Helping Employers Manage Prescription Drug Spending Amid Rising Costs, Driven by High-Cost GLP-1s
A new Business Group on Health survey of employers uncovered a truth: soaring demand for GLP-1 weight-loss drugs is significantly raising health care costs for employers and unions, and is already prompting some employers and other plan sponsors to reduce benefits as soon as next year.
In the past two years alone, drug spending has jumped to 27% of companies’ overall health care spend. In terms of the factors driving up drug spending, 56% of employers surveyed specifically identified GLP-1s as driving up health costs by a “very great” or “great” extent, more than high-cost therapies (46%), the increase in prevalence of mental health conditions (25%), the fragmentation in the delivery system (7%), poor quality providers (5%) and fraud, waste and abuse (4%).
New reporting from Axios explains how employers are dealing with the difficult question of how to manage the costs of these high-priced GLP-1 drugs. Axios writes: “employers have been reluctant to pass on health cost increases to workers in a tight labor market, but ever-rising demand for costly care could finally force a reckoning, experts say.”
However, employers are not alone in managing through these challenges. Many rely on their pharmacy benefit managers (PBMs) to navigate these high costs. As businesses contend with soaring drug prices, PBMs work to secure discounts from drug manufacturers, allowing employers large and small to maintain high-quality drug benefits for employees and their families.
According to a 2023 survey of employers, the vast majority of employers say their PBM is valuable in helping their business offer affordable, sustainable benefits that best meets the unique needs of their employees.
Pharmaceutical companies too have acknowledged the effectiveness of PBMs in reducing medication costs. Earlier this year, drug manufacturers Novo Nordisk and Eli Lilly reported lower-than-projected profits on their weight loss drugs as a direct result of PBMs’ ability to secure deep discounts.
For employers doing everything in their power to offer competitive benefits to keep their employees healthy and attract and retain top talent, the partnership with their PBM has never been more essential.