Managing Rx benefits: Pick a priority 

Managing Rx benefits: Pick a priority
January 25, 2024

Managing the pharmacy benefit was plenty challenging already – and then came last year’s GLP-1 tsunami. The pace of change in pharmacy – from medical breakthroughs to regulatory battles – is overwhelming. But since not acting is not an option, let’s focus on three of the most pressing issues that will need your attention this year and the actions you can take to get back in control. 

The drug that became a TikTok star

Seemingly overnight, GLP-1s, a class of medications successfully used to treat diabetes for almost two decades, have become the “it” approach to weight-loss. As Ozempic started cropping up in social media, TV shows, and conversations at home and around the watercooler, employers saw spend on this class of medications double in a matter of months. With additional GLP-1s in the drug development pipeline, and potential new indications for addiction, liver disease, and fertility, employers should plan on continued growth in spending on this class of medications for the foreseeable future.  

The efficacy of GLP-1 medications in managing type 2 diabetes is well-established in medical literature and clinical practice guidelines. There is less robust support for the widespread use of pharmacotherapy in the treatment of obesity as a standard of care, although, as with other chronic diseases, some patients may benefit from medications. GLP-1 medications used for weight loss carry an average price-tag of around $800 per month (after discounts and rebates), meaning a year of persistent treatment costs roughly $9,600. For an overweight or mildly obese middle-aged individual with no other risk factors who might choose to continue treatment for roughly 20 years, the value proposition becomes challenging, despite the demonstrable relation of BMI and total medical expenditures. While the perils of not addressing obesity are known, the fact is, for most employers, there simply isn’t enough money in the budget to cover the costs of these medications for everyone who qualifies under the current US Food and Drug Administration (FDA) labeled parameters.  

Despite these headwinds, there are both established and emerging tactics to mitigate the short- and long-term costs of these medications, while providing employees equitable access to the treatment that best meets their needs.  

  • At minimum, ensure appropriate utilization management strategies like step therapy, prior authorization and quantity limits are in place, and consider opportunities to strengthen criteria.  
  • Benchmark your current benefits strategies compared to the market and your industry and engage your PBM on opportunities to be more aggressive with management.  
  • Project future cost and utilization trends based on your population demographics and current and potential management strategies. Will increased costs for GLP-1-related medications be offset by reductions in total medical expenditure, absenteeism and disability?  
  • Review opportunities for greater synergy across benefits. A holistic strategy that addresses whole person care, including adequate access to dieticians, behavioral health providers, complimentary weight management solutions, and complex disease management programs for those at highest risk will be of most value.  
  • Evaluate opportunities to engage earlier on in the supply chain, through direct purchasing or sourcing from the manufacturer.  

Employers can’t reverse the utilization and cost trends for this class of medications, but these and other actions can help minimize the element of surprise.  

Ultra-high-cost novel therapeutics 

While GLP-1s dominated last year’s headlines, the FDA approved five new gene therapy products in 2023, the most in a single year since the first therapy was approved in 2017. Gene therapies are novel ultra-high-cost products that modify a person’s genes, potentially curing or significantly improving a chronic disease; cell therapies are a related group of products that modify a person's cells to treat or cure certain conditions, particularly certain cancers. The products currently on the market or nearing approval primarily target rare neuromuscular conditions, eye conditions, and blood disorders. However, two recently approved therapies are notable because they target sickle cell disease, a condition that is somewhat more prevalent than the conditions treated by previously approved gene therapies. 

Looking ahead, the pipeline for these innovative therapies is robust. The FDA is projecting 10-20 gene and cellular therapy approvals annually by 2025. With typical price tags in the $2-3 million dollar range for gene therapy products and approximately $500,000 for cellular therapy treatments, employers who have been putting off action in this area should prioritize review in 2024. The impact of these therapies for a plan sponsor is difficult to quantify given less-predictable utilization and ultra-high costs, but the first step is to know your potential exposure and work to develop a long-term management approach. Engage your PBM and medical carrier(s) to review coverage across benefits, understand the utilization management policies for these treatments, the network of providers contracted to administer these therapies, and available contracting and payment strategies.  

Targeted cancer treatments

For most employers, cancer treatment is a top category of spend across both the medical and pharmacy benefit. Cellular therapy treatments targeting select cancers, as well as new targeted immunotherapy treatments, are improving outcomes for many patients. While mortality related to cancer is down, new cancer cases are expected to hit a record-breaking 2 million in 2024. Notably, people are getting diagnosed with cancer younger, and are living with cancer longer. The result is an increase in utilization of cancer treatments that will continue to impact spend and trend into the foreseeable future. As with the above-mentioned focus areas, a comprehensive strategy to address cancer care is an area to refresh in 2024. 

These three issues will be key drivers of pharmacy and medical trend in 2024 and beyond.  While you may choose to focus on one to begin with, be sure the others are on your strategic planning roadmap.  

This post is one in a series of Seven breakthrough benefit strategies to explore this year.

About the author(s)
Related Solutions
Related insights
Related Case Studies