Prescription drug costs have become one of the most significant and fastest-growing components of employer healthcare spend. Specialty medications — biologics, gene therapies, and other high-cost drugs — are driving much of the increase, but traditional brand-name inflation continues as well.
For small employers, the impact of a single high-cost claimant can be dramatic. A single employee on a specialty medication can cost hundreds of thousands of dollars annually — a figure that can destabilize a small group's entire benefits program.
Generic substitution programs: Ensuring your plan design incentivizes generic use — through tiered copays or mandatory generic provisions — can deliver immediate savings without reducing access to effective medications.
Formulary management: Working with a pharmacy benefit manager (PBM) to maintain a well-designed formulary that steers employees toward cost-effective alternatives is a foundational strategy.
Specialty drug carve-outs: Some employers are separating their specialty drug benefit from their general pharmacy benefit and managing it through a specialty-focused PBM or vendor. This can unlock significant savings on high-cost medications.
Manufacturer copay assistance programs: For employees on high-cost brand medications, manufacturer copay assistance programs can reduce out-of-pocket costs — though plan design must be structured carefully to capture the full benefit.
Independent PBM auditing: Many employers are surprised to discover that their PBM contract contains terms that favor the PBM over the employer. An independent audit can identify opportunities to renegotiate and improve contract terms.
The pharmacy benefit landscape is complex, but the potential savings are real. An experienced benefits advisor can help you evaluate your current program and identify the strategies most likely to deliver results for your specific situation.
