How alternate dispensing channels are affecting employer drug coverage
The rise of direct-to-consumer (DTC) and direct-to-employer (DTE) drug channels is changing how employers think about prescription drugs, pharmacy benefits and the employee experience. Traditionally, pharmacy benefits ran through PBMs, formularies and retail or mail-order pharmacies. DTE shifts negotiations outside the pharmacy benefit into a direct employer-vendor relationship with predictable per-unit pricing. DTC lets employees access medications directly from manufacturers or manufacturer-run pharmacies.
These changes matter because they affect price transparency, clinical oversight, member out-of-pocket costs and the total cost of care. In Mercer’s Health and Benefit Strategies for 2027 survey of about 600 employers, 42% of employers with 500 or more employees said they are very or somewhat interested in pursuing a DTC approach, and 17% are very or somewhat interested in pursuing a DTE approach.
Understanding DTC and DTE models
DTC pricing is set directly by manufacturers, allowing patients to purchase medications outside of typical PBMs or intermediaries. This often results in more transparent and potentially lower costs compared to traditional retail pharmacy cash prices. A key feature of DTC is that patients pay 100% of the drug cost.
DTE models enable employers to contract with third-party vendors outside of the insurance pharmacy benefit to provide members access to medications through pharmacies with direct manufacturer pricing. Because third parties are involved, additional fees for shipping, dispensing and services like credit card processing apply — costs not seen in DTC. In a DTE framework, employers typically share some portion of the medication costs with members. In addition, some DTE solutions offer clinical oversight and care management support for members. Currently, DTE programs mainly focus on GLP-1 therapies used for weight management, reflecting the high demand for treatment, gaps in coverage and cost challenges faced by employers. However, some target other brand name drugs as well, typically those with discretionary insurance coverage or those excluded from PBM formularies.
Many DTC and DTE vendors offer convenience by using telehealth for prescriptions and home delivery or in-person pick-up with refill reminders. Other vendors allow patients the option to have any qualified provider send the prescription to the vendor for fulfillment and delivery.
However, these models have limitations. As of today, prescriptions processed through DTC and DTE are not captured in traditional PBM platforms, so they are not reviewed for potential drug-drug or drug-disease interactions. These prescription fills also are not integrated into members’ electronic medical records, which may affect clinical oversight and care coordination. For example, when prescriptions flow outside traditional claims and PBM pathways, medication decisions, lab monitoring, drug–drug interaction checks, and pharmacist counseling can fall into gaps: primary care physicians may not see new prescriptions in the medical record, specialty nurses may lose visibility into adherence patterns, and routine safety monitoring — labs, imaging, or follow‑up visits — can be missed. That fragmentation can potentially increase the chance of adverse events, reduce long‑term adherence, and leave employees confused about who to contact when problems arise.
As employers review and implement DTC and DTE programs, it’s very important that convenience in telehealth and dispensing is paired with clear communication, seamless clinical oversight, and equitable access — so that DTC/DTE innovations improve health outcomes and trust rather than creating new gaps or burdens for workers.
In addition, depending on the vendor and the PBM, member payments for medications purchased through DTE arrangements may not count toward deductible or out-of-pocket maximums. These gaps require plan sponsors to carefully consider how to incorporate DTC and DTE into benefit designs. Benefits teams will need new playbooks addressing vendor governance, employee-facing FAQs and training for staff who answer medication questions.
Considerations for GLP-1 coverage strategies
As plan sponsors prepare for 2027 drug benefit design, a key question is: “What do we do with weight management drugs”? Most plan sponsors would prefer to cover these therapies with guardrails to ensure appropriate patient selection and coordinated care, including lifestyle and nutrition support. However, many employers are seeing GLP-1 coverage increase their annual health benefit costs by an unsustainable rate.
Here are key considerations for sponsors’ GLP-1 strategy in this evolving landscape:
- Including coverage in the prescription drug benefit. This allows claims to be processed through the PBM, maintaining clinical oversight and integration with electronic medical records. Although net prices after rebates are falling, coverage through insurance may still be costly to the plan sponsor given the high demand and utilization. In addition, under most set-ups, members using these medications will likely reach their deductibles and out-of-pocket maximums, making the plan sponsor responsible for 100% of costs for much of the year. Increased competition may continue to lower net prices over time.
- Excluding coverage from the prescription drug benefit. Members can be encouraged to use DTC channels at full member cost, or plan sponsors can contract with third parties to support members through DTE access and pricing. While DTC and DTE often offer lower prices, especially before rebates are considered, they may provide less ability for employers to apply utilization management or clinical oversight. Plan sponsors must weigh cost control, clinical safety and member experience when choosing the best approach. Compliance issues must also be taken into account when considering changes to pharmacy plan designs or funding mechanisms supporting members outside the pharmacy benefit.
