Prescription drug costs are having a real impact on employer health insurance costs, and as those costs continue to rise, they are putting pressure on company budgets and profit margins. For many employers, pharmacy spending is no longer just another line item. It has quietly become one of the biggest drivers of overall health plan costs.
Prescription drugs now account for more than 25% of total health care spending. Specialty medications alone can represent more than half of total pharmacy costs, despite being used by only a small percentage of members.
Understanding where those dollars are going is the first step toward managing them more effectively.
Don’t Let High-Cost Claims Drive Your Renewal
The second half of the year is here, which means many employers are less than 90 days away from their next health insurance renewal.
Not long ago, the largest claims on a plan were usually tied to a major surgery, an extended hospital stay, or a serious illness. Today, many of the highest-cost claims are being driven by specialty medications instead.
Some specialty drugs can cost $20,000 to $50,000 a month. It only takes one or two members using these medications to add hundreds of thousands of dollars to your pharmacy spend, and that kind of spike can meaningfully shape your renewal.
The Good News
These costs are not always unavoidable. Many employers are surprised to learn there are strategies available that can meaningfully reduce specialty pharmacy costs while still maintaining quality care for employees. A few worth knowing about:
- International sourcing
- Specialty drug carve-outs
- Drug manufacturer assistance programs
Questions Worth Asking Before Your Renewal
- Are pharmacy claims driving your high-cost claims?
- Are the drugs behind those claims eligible for cost-saving strategies like the ones above?
- How would it feel to save employees, and your bottom line, hundreds of thousands of dollars?
The employers who tend to see the best renewal outcomes are the ones identifying these opportunities before the renewal is calculated, not after it lands on their desk.
Understanding what is driving your highest-cost claims today can open up more options tomorrow.
If you would like a fresh set of eyes on yours, DM me for more information.