What Can We Do About High-Cost Specialty Medications?
High cost specialty medications are crushing employer pharmacy budgets, but you have more levers than “just increase copays” or “exclude everything.”
Why Specialty Meds Hurt So Much
Specialty drugs are often life changing therapies for cancer, autoimmune disease, MS, hemophilia, and now GLP 1s for diabetes and weight management. They typically:
Represent a small percentage of prescriptions but a very large percentage of total pharmacy spend
Cost thousands to tens of thousands of dollars per month
Are growing as a share of employer drug spend, with projections that specialty and GLP 1 categories will drive the majority of pharmacy trend for many plans in the next few years
For small and midsize employers, one or two people on a high cost drug can move the renewal.
Step One: Tighten How These Drugs Are Used
You cannot control list prices, but you can control how and when these meds are approved.
Practical levers:
Independent utilization management: Make sure appropriate prior authorization and step therapy are in place, especially for GLP 1s and other high cost categories.
Clinical criteria aligned to diagnosis: Cover GLP 1s for diabetes and high risk metabolic situations first; be more targeted around pure weight loss indications if budget is tight.
Biosimilars and lower cost equivalents: Where there are biosimilars or therapeutically equivalent options, your formulary should push in that direction by default.
The goal is not to block care. The goal is to make sure the highest cost drugs are used where they actually deliver the most value.
Step Two: Fix The PBM And Contract Side
A big part of your specialty spend runs through your PBM relationship.
Key actions:
Push for transparency: Move away from opaque spread pricing toward pass through or clearly disclosed pricing where you can actually see ingredient cost, dispensing fees, and rebates.
Optimize specialty pharmacy network and site of care: Direct fills and infusions to lower cost specialty pharmacies and outpatient or home infusion settings when clinically appropriate.
Make sure rebates flow back: Understand how specialty rebates are defined and how much actually comes back to your plan versus staying with the PBM or carrier.
Even for smaller employers, working through the right advisor or coalition can give you access to more modern, transparent PBM models designed to manage specialty cost instead of just mining it.
Step Three: Use Defined Allowance Structures For GLP 1s And Similar Drugs
Traditional “cover or exclude” decisions on GLP 1s and other specialty categories are getting less effective as demand explodes.
A more strategic approach is:
Carve certain high cost categories out of the base medical/pharmacy plan
Fund them through defined, employer controlled allowances or “specialty care accounts” with clear guardrails around who qualifies and how much support is available
This model lets you:
Cap your exposure
Still help the right employees access important therapies
Separate long term health support from open ended, unlimited claims risk
It is very similar in spirit to how we think about SIMRP and other employer defined benefit buckets: fixed, tax aware funding on your terms instead of open ended spend.
Step Four: Integrate Specialty Strategy Into Your Overall Benefits Plan
Specialty drug costs should not be managed in isolation. They sit inside your broader medical, pharmacy, and tax strategy.
For a trades or home service employer, the integrated approach looks like this:
Core medical and pharmacy structure that includes real specialty management, not a generic off the shelf formulary
A SIMRP style medical reimbursement plan and supplemental coverages that take pressure off families when major events happen
Where appropriate, defined allowance models for GLP 1s and other specialty categories so you can support access without giving the plan a blank check
When those pieces work together, you are no longer just reacting to the latest specialty shock claim. You are using structure to decide what you will fund, how, and for whom.
