The pharmaceutical industry is experiencing a surge in drug spending, with a significant increase of $50 billion (11.4%) in 2024, reaching a total of $487 billion at net manufacturer prices. This trend is expected to continue in the coming years, driven by the growth of new therapeutics in areas such as oncology, immunology, cardiovascular, obesity, and diabetes. One of the main contributors to this increase is the use of GLP-1 drugs, which are projected to account for 0.5% to 1.0% of the estimated medical cost trend for 2026.
Health plans are struggling to manage the costs associated with these treatments, particularly GLP-1 weight management use. Despite the potential of these drugs to prevent expensive health issues, many patients abandon them within a year of starting treatment. To address this, health plans are implementing stricter clinical criteria and step therapies for GLP-1 weight management use. However, to sustain the health benefits of these drugs, health plans should consider integrating GLP-1 coverage with services such as nutritional counseling, behavioral coaching, and digital weight management tools.
Another area of concern for health plans is the financial risk posed by cellular and gene therapies (CGTs). Reinsurance carriers often exclude payment for conditions eligible for CGTs, leaving health plans to bear the costs. To manage this risk, health plans should explore innovative reimbursement models, such as outcomes-based rebates, milestone-based payments, and carve-out partnerships.
To navigate this complex and rapidly evolving landscape, health plans and employers must be agile and proactive. This includes evaluating strategies and partners to improve pharmacy benefits, leveraging technologies and AI-enabled solutions to optimize costs, and exploring value-based contracting and enhanced prior authorization criteria. By taking a proactive approach, health plans can better manage the financial risks associated with new therapeutics and ensure that patients receive effective and sustainable treatments. Ultimately, the key to success lies in finding a balance between providing innovative treatments and managing costs, while also prioritizing patient outcomes and well-being.