A recent survey conducted by the National Alliance of Healthcare Purchaser Coalitions reveals that nearly three-fourths of employers believe rising healthcare costs are forcing them to make trade-offs with salary or wage increases. Furthermore, many anticipate the need for more cost-shifting to employees due to these increased expenses. The survey highlights that drug prices pose the most significant threat to healthcare affordability, with 99% of employers agreeing that it is a major concern, followed closely by high-cost claims and hospital prices. This sentiment reflects a growing apprehension among employers regarding their healthcare spending, leading them to reconsider arrangements with pharmacy benefit managers (PBMs) that may be contributing to inflated costs.
Employers are bracing for a surge in healthcare benefits spending, with projections for 2025 estimating increases of approximately 8% to 9%. The urgency for companies to adopt strategies that mitigate rising costs is emphasized by comments from survey respondents, some of whom described the situation as an “existential threat.” The rising cost of pharmaceuticals, particularly drugs like glucagon-like peptide-1 receptor agonists (GLP-1s), which are gaining popularity for weight loss and other conditions, is driving much of this cost escalation. Consequently, employers are debating whether to cover these high-priced medications, with around 46% already providing coverage for obesity treatment and another 21% considering it in the next three years.
Among employers planning to offer or expand coverage for GLP-1s, many are exploring methods to manage expenses, such as restricting access to specific populations with chronic conditions or higher body mass indexes. Additionally, some are considering tying coverage to lifestyle changes or covering compounded versions of the drug, despite facing pushback from pharmaceutical companies. Employers are also looking to reshape their pharmacy benefits in an effort to control costs, with 72% contracting with major PBMs like Caremark, Express Scripts, or OptumRx. These PBMs have been criticized for opaque contracts and practices that may lead to unnecessary spending on high-cost drugs.
More than half of surveyed employers are contemplating changes to their PBMs within the next one to three years, seeking greater transparency and to reduce conflicts of interest that have been prevalent in the industry. The reimbursement structures of major PBMs often incentivize prioritizing high-cost drugs in formularies, which contributes to escalating drug expenditures. In response, many employers are advocating for more biosimilars in their formularies to achieve cost savings and improve drug affordability.
To tackle the challenge of expensive claims, over half of the employers surveyed are implementing strategies such as carving out prior authorization, direct contracting with providers, and purchasing drugs through alternative channels. While fewer employers are currently redirecting care to more affordable settings or promoting precision medicine, there is growing interest in these approaches, indicating a shift toward more cost-effective healthcare delivery methods. Overall, the survey underscores the pressing need for employers to address the rising healthcare costs while balancing employee compensation and benefits.
