The cost of prescription drugs is rising rapidly, reshaping the way employers approach their health benefits strategy. With specialty medications on the rise and biosimilars entering the market, pharmacy benefits are becoming a major focus and a major opportunity for cost control and better care.

If your medical and prescription plan is self-funded or you are considering a move in that direction, the following five key insights can help you improve your pharmacy strategy and make smarter decisions for your organization.

1. Streamlining the Benefits Administration Process

Prescription drugs now represent about 36% of total health plan spending. With the growing use of specialty medications, GLP-1s, and gene therapies, costs are expected to continue to rise. As the workforce ages and chronic conditions become more prevalent, pharmacy benefits are becoming a key focus for many employers.

To stay ahead of trending health issues, reviewing your current benefits structure and identifying high-cost drivers in the prescription drug data can help you adjust unnecessary spending and optimize your benefits.

2. Traditional/Legacy vs. Transparent/Modern PBMs

Outpatient prescription drugs are managed through Pharmacy Benefit Managers (PBMs). These PBMs manage generics, brand-name, and specialty drugs within your medical plan. Traditional PBMs often operate with complex contracts and undisclosed revenue streams, making it challenging for employers to fully understand their costs.

In contrast, transparent (or cost-based) PBMs are reshaping the landscape by:

• Operating with flat fees
• Return 100% of manufacturer rebates to the employer
• Focus on the lowest net cost, not inflated discounts (fiduciary responsibility)
• Implement tech-solutions to drive down costs
• Streamline member support and outreach

Transparent PBMs also integrate cost-containment programs that directly impact plan savings and member experience. Working with transparent PBMs allows you to benchmark and access your pharmacy data to understand what the driving costs are and how to protect your budget without compromising care for your team.

3. Biosimilars Are a Game-Changer

As patents expire for popular biologic drugs used to treat autoimmune conditions, such as Humira for rheumatoid arthritis or Crohn’s disease, and Stelara for psoriasis and ulcerative colitis, FDA-approved biosimilars are entering the market at significantly lower prices. These medications offer the same safety and efficacy, but at up to 50% less cost. Employers working with the right PBM can proactively shift utilization to these lower-cost options, sometimes saving tens of thousands per member annually.

With the implementation of biosimilars comes the need for education, so employees and their dependents are aware of the safety and benefits biosimilars bring to the table. Including your employees in the discussion helps not only educate them on drug safety but also highlights how these medications can help reduce out-of-pocket costs, leading to more meaningful savings on their prescriptions. Education builds trust and an understanding that helps drive employees to choose a lower-cost alternative.

4. It’s Not Just About the Drug, It’s About the Process

A best-in-class PBM distinguishes themselves by integrating clinical programs and support that help members access the right drug at the right price, without creating an administrative burden. When everything from member outreach to prior authorization is streamlined, employers see stronger adherence and cost control.

Most transparent PBMs have multiple outreach programs intended to provide steerage to cost saving opportunities. They have websites and apps that are cutting-edge and user-friendly so that members of all ages can easily navigate. With this technology, members can find cost estimators, new pharmacies, mail order options, or access cost savings programs such as GoodRx or Cost Plus Drugs.

5. Smarter RX is Shaping the Road Ahead

With biosimilars expected to triple in size over the next three years, now is the time to develop a more cost-effective strategy. Implement technological solutions to drive down costs, including pass-through pricing, formulary management solutions, member advocacy platforms, and member-facing cost comparison tools. All solutions, when paired with member education, biosimilar drug solutions, and transparency in pricing, can lead to significant savings and improved care.

As the market evolves, employers will need to understand how federal policy may impact drug pricing, rebate arrangements, and plan design flexibility. With support from your advisor, you can stay ahead of the shifting regulatory landscape. For more information on all compliance deadlines, visit our World Compliance Calendar.

Cut Costs, Not Care

Employers who offer level-funded or self-funded plans can collaborate with their advisors to deliver improved outcomes for their organization and its people. Reviewing plan data and utilizing a PBM that offers transparency can help improve member care, alleviate administrative headaches, and ultimately benefit everyone’s bottom line.

Cutting costs comes down to a thoughtful approach, which includes:

• Embracing biosimilars
• Focusing on cost-containment programs
• Implementing technological solutions
• Limiting network disruption
• Improving member support

Through a transparent and strategic approach, organizations can reduce costs without compromising plan design or member support.

Have Questions?

Our team can help you evaluate PBM options, integrate cost-saving programs, and design a pharmacy strategy that works smarter for your business and your employees.

Connect with us today to start building a smarter pharmacy strategy.

This update is not intended to be exhaustive, nor should any discussion or opinion be construed as legal advice. Readers should contact legal counsel for legal advice. All rights reserved.