Amid rising drug costs, employers seek reforms beyond Medicare, as indicated by the Business Group on Health. A survey of major employers revealed 91% are concerned about pharmacy costs while spending on pharmacies increased from 21% (2021) to 24% (2022). Specialty pharmacy growth and costly drugs in development also trouble employers. Transparency on pharmacy benefit managers’ compensation, supply chain complexities, and drug development costs are key concerns. The Business Group backs Congress’s transparency proposals, but warns of unintended effects, potentially leading to increased costs for commercial payers.
Amidst the escalating costs of medications, employers are advocating for reforms that encompass the business sector as well, according to the Business Group. The issue of pharmaceutical expenses holds significant importance in the policy discussions on Capitol Hill, and, unsurprisingly, it’s equally perturbing for employers nationwide.
In its recent annual survey of major employers, the Business Group on Health unveiled that a substantial 91% of them harbor concerns about the prevailing trend of pharmacy costs. The survey also highlighted that the median expenditure on pharmacy services continues its upward trajectory, climbing from 21% in 2021 to 24% in 2022.
Furthermore, the survey revealed that an overwhelming 92% of respondents expressed apprehension regarding high-cost medications currently in development. The emergence of specialty pharmacy is steadily contributing to healthcare expenditure, with a significant share being occupied by orphan drugs aimed at treating rare, intricate conditions.
Ellen Kelsay, CEO of the Business Group, noted during a media briefing, “Pharmacy is an intricate domain, and they are closely monitoring any legislative measures about drug pricing.”
The survey’s findings underscore that 79% of employers are either concerned or highly concerned about the financial implications associated with gene- and cell-based therapies. Similarly, 85% share the same sentiment regarding GLP-1 therapies designed for weight loss and diabetes treatment. The latter, in particular, has stirred considerable debate among insurers and plan sponsors due to surging demand, especially for off-label applications.
Additional prominent concerns encompass the opacity surrounding rebates negotiated by pharmacy benefit managers (PBMs), the intricacies of the supply chain, and the challenges employers face when attempting to assess the performance of entities within that supply chain.
Among the surveyed employers, 73% prioritize the requirement for PBMs to disclose their compensation and pricing as a transparency imperative. Additionally, 28% advocate for transparency regulations concerning the development costs of specific drugs.
Kelsay emphasized that numerous proposals gaining traction in Congress, particularly those advocating for augmented transparency, garner support from the Business Group and its primarily large corporate members.
However, she cautioned that several of these proposals could potentially apply solely to Medicare, which might inadvertently lead to ramifications within the commercial market. To counterbalance potential losses resulting from Medicare’s drug price negotiations, pharmaceutical manufacturers might raise costs for commercial payers and plans.
“We undoubtedly hope to witness broader application of some of these pricing reforms,” she stressed.
