Headlines have swirled around the accessibility and affordability of certain drugs, such as cell and gene therapies, and the increasingly popular GLP-1 agonists, also known as GLP-1s, currently used for Type 2 diabetes and weight loss. Against this backdrop, employers have had to navigate utilization management and other access challenges, outdated payment models and opaque contracting practices. All of this points to a mounting unsustainability of the current prescription drug model in the U.S.
Business Group on Health, which delivers critical insights and identifies trends on the multipronged health and well-being challenges employers face, has elevated the discussion of pharmaceutical pricing. Rising drug costs are of great concern not only to employers, but also to policymakers, patients, payers and various pharmaceutical supply chain stakeholders, among others.
The Business Group’s 2024 Large Employer Health Care Strategy Survey showed that:
92% of employers have concerns about high-cost drugs in the pipeline
91% reported concern about pharmacy cost trend overall.
Already-high pharmacy costs are expected to rise about 9%, for both 2023 and 2024.
Employers reported 24% of health care dollars going toward pharmacy benefits in 2022, up from 21% the prior year.
Surging pharmacy cost trend is not a new issue, to be sure. The Business Group convened the Pharmaceutical Supply Chain Leadership Forum, a multiyear effort to organize key stakeholders who participate in the delivery of, and payment for, prescription drugs from the point of inception to patient delivery. The forum, which issued a call to action and developed consensus-driven solutions, including market- and policy-based reforms, concluded in a July 2021 report that the U.S. pharmaceutical supply chain must be remodeled to address long-standing conflicts and achieve a delivery model marked by transparency, affordability and access. The time is now for employers to lead the change toward this better market model.
More recently, Business Group on Health issued a policy position statement on prescription drug pricing, leveraging the recommended pharmaceutical supply chain reforms. The statement cites legacy-market structures, opaque business practices and conflicts of interest as further contributing to price inflation in the pharmaceutical industry.
In the past year, the increasing scrutiny of the pharmaceutical industry has yielded positive results, as evidenced by the announcement this past spring that insulin manufacturers would begin to cap out-of-pocket cost for patients, addressing a widespread patient cost pain point. More recently, several large pharmacy benefit managers (PBMs) announced more transparent pricing model options, in addition to non-rebate driven formulary approaches that were already available. Alternative PBM models such as Navitus and CapitalRx have emerged, offering choices beyond conventional pharmacy benefit structures.
Some payers have partnered with disruptors outside the traditional PBM model. Innovative discount programs such as GoodRx operate outside of pharmacy benefit programs, offer lower out-of-pocket cost options for patients. Savvy entrepreneurs such as Mark Cuban, who appeared in November on a Business Group on Health podcast, seek to both bypass the complexity of drug pricing and re-establish trust and transparency as cornerstone values. Moreover, some elements of Mark Cuban’s model for Cost Plus Drugs echo recommendations made in Business Group on Health’s multistakeholder July 2021 report.
During this critical time in addressing the high cost of drugs, Business Group on Health will continue to champion the sustainability of employer-sponsored prescription drug benefits, support market and policy changes that enhance the ability of employer plans to negotiate fair, transparent and sustainable financial arrangements with partners in the pharmaceutical market, and work to ensure that employees and their families have cost-effective access to appropriate medications and treatments.
