Pharmacy Price Management

The seek for employer prescription profit options and the rising curiosity in HRAs

For those who’re an employer feeling the strain of rising pharmacy prices, you’ve bought firm. Employers all through the U.S. are scuffling with rising medical insurance premiums in response to skyrocketing prescription prices coupled with unprecedented use. Earlier than we dig into the main points (and options), let’s check out some numbers.

Stats for employers to find out about pharmacy value management

1. 24% of well being care {dollars} went to pharmacy bills in 2024.¹

2. Specialty drug prices are rising at almost 3x the speed of normal medical inflation.²

3. Employers anticipate an 11-12% enhance of their pharmacy prices into 2026.¹

4. New gene therapies for circumstances like sickle cell or muscular dystrophy carry worth tags between $2 million and $4 million per dose.³

5. In 2026, it is not uncommon for two% of plan members to drive greater than 50% of complete drug prices.²

The GLP-1 spend tsunami

The price related to GLP-1 prescriptions has gotten so excessive it has a brand new time period: spend tsunami. The surge of individuals utilizing these medicine has brought about a monetary tidal wave for insurance coverage carriers and employers.

Influential components of the GLP-1 spend tsunami are 1) the medicine are very costly, 2) they’re prescribed for months or years vs a one-time value, and three) there are lots of people taking them.

The truth is, GLP-1 spend elevated by an estimated 50% in 2025, and employers now face a “frequency cliff” the place 10% or extra of their workforce could have a prescription that prices $12,000–$18,000 per yr.^3,4

North Dakota and Texas assist GLP-1 protection for weight problems

As GLP-1 medicines develop in recognition for weight problems administration, states are within the nascency of displaying assist and requiring protection.

North Dakota is addressing the difficulty by its Important Well being Advantages Benchmark Plan. The plan defines which medical companies personal medical insurance plans should cowl within the state’s particular person and small-group markets. In January 2025, North Dakota up to date the Benchmark Plan to require protection of GLP-1 and GIP medicine for the therapy of morbid weight problems and metabolic syndrome.⁵

Texas HB 2412 was launched in February 2025 and proposes that well being profit plans in Texas present protection for GLP-1 to deal with weight problems;⁶ the invoice is with the insurance coverage committee. Employers with self funded plans are exempt from state mandates⁷ however might face rising premiums for stop-loss insurance coverage if they’ve a big share of workers utilizing GLP-1s for weight problems.

Pharmacy advantages managers

How PBMs influence prices of employer pharmacy advantages

Pharmacy advantages managers play an influential position in prescription drug prices. They determine the listing of medicine an insurance coverage coverage will cowl (the formulary), they usually negotiate reductions (referred to as rebates) with drug makers in alternate for deciding {that a} drug is on the listing. The PBM additionally decides how a lot an worker pays for a prescription and the way a lot the employer pays.

Pharmacy advantages managers could be controversial. Whereas some argue there must be PBM reform,⁸ it could possibly be a far-off answer.

Pharmacy profit options: How one can negotiate value financial savings

If you wish to proceed working together with your PBM, negotiating your contract is step one in value financial savings. A few of the most vital issues an employer can take a look at of their PBM contract are unfold pricing, rebate retention, and drug pricing benchmarks.

Unfold pricing is when a pharmacy advantages supervisor fees the employer greater than it pays the pharmacy.

Motion: Keep away from unfold pricing by exploring a cost-plus or flat-fee mannequin.

Rebate retention is when a PBM retains some or the entire drug producer rebates as an alternative of passing these financial savings again to the employer (giving the PBM a kickback). Rebate retention is usually hidden beneath phrases corresponding to administrative charges, knowledge sharing charges, or worth safety rebates.

Motion: Keep away from rebate retention by exploring a 100% pass-through contract.

Drug pricing benchmarks are used to find out how a lot prescriptions value. NADAC is the Nationwide Common Drug Acquisition Price; it’s the most clear benchmark and displays real-world market prices. AWP is Common Wholesale Worth, and it’s what most PBMs use. The issue? AWP is usually referred to as “Ain’t What’s Paid” as a result of it’s an inflated listing worth that possible comprises hidden markups.

Motion: Keep away from pharmacy value markups by asking for NADAC-based pricing.

HRAs as a pharmacy cost-control answer

Within the battle for medical insurance threat administrationHRAs are surfacing as a extremely efficient answer. They’re designed to assist employers management their finances and for workers to have flexibility and selection.

Listed below are a number of the principal attracts of HRAs as a monetary technique:

Do HRAs cowl prescriptions?

Sure, HRAs can be utilized to cowl prescriptions. Employers can reimburse for each brand-name and generic medicines tax-free.
The IRS determines what’s accepted as a certified medical expense,⁹ and the listing is in depth. Whereas an employer does have authority to choose out of particular medicines, workers nonetheless have unimaginable flexibility as a result of they don’t want a prescription for many of the objects to qualify for reimbursement.¹⁰

Overview of medicines coated by HRAs

This isn’t an exhaustive listing, nevertheless it provides an summary of medicines which can be reimbursable with an HRA. Employers have management over their design plan and might tailor coated medicines.

Ache and allergy aid

• Ache relievers: acetaminophen (Tylenol), ibuprofen (Advil/Motrin), aspirin, and naproxen (Aleve)

• Allergy and sinus: antihistamines (Claritin, Zyrtec, Benadryl), decongestants, and nasal sprays

• Topicals: anti-itch lotions (hydrocortisone), calamine lotion, and medicated patches for muscle ache

Digestive well being

• Antacids: Tums, Rolaids, and acid controllers like Nexium or Prilosec

• Abdomen cures: Pepto-Bismol, anti-diarrheals (Imodium), and laxatives

• Movement illness: Dramamine or medicated wristband

First support and wound care

• Fundamentals: Bandages, gauze, medical tape, and liquid bandages

• Antiseptics: Rubbing alcohol, hydrogen peroxide, and antibiotic ointments (Neosporin)

• Diagnostic instruments: Thermometers, blood strain screens, and pulse oximeters

Respiratory and chilly/flu

• Cough and chilly: Cough syrups, throat lozenges, and chest rubs (Vicks)

• Respiration aids: Saline nasal rinses (Neti pots), vaporizers, and (choose) bronchial asthma inhalers

Menstrual care merchandise

Sexual well being and household planning

• Contraception: Contraception tablets (require Rx), condoms, and spermicides

• Testing: Being pregnant assessments and ovulation predictors

• Fertility: In-vitro fertilization (IVF) and associated medicines

Child care

Weight management and GLP-1 medicines

Word: Whereas the IRS permits these medicines to be coated, most of those require a letter of medical necessity or a selected analysis to be eligible for HRA reimbursement.

• GLP-1 and GIP medicines: semaglutide (Wegovy/Ozempic) and tirzepatide (Zepbound/Mounjaro) when prescribed for a identified situation like weight problems or kind 2 diabetes

• Oral weight reduction medicines: phentermine (Adipex-P), naltrexone-bupropion (Contrave), and liraglutide (Saxenda)

• Weight reduction packages: Charges for packages like WeightWatchers or scientific weight administration plans (supplied they’re prescribed to deal with a selected illness like hypertension or weight problems)

FSA vs HRA for prescriptions

Individuals usually ask whether or not it’s higher to make use of an FSA or HRA for prescriptions. The brief reply is it relies upon. Evaluating the 2 isn’t apples to apples since they’re completely different funding strategies, however there are key factors to contemplate.

A notable distinction is that an FSA is funded by an worker’s earnings, and an HRA is funded by an employer’s month-to-month allowance to the worker.

Evaluating FSAs and HRAs as funding strategies for medicines

Why a Take Command HRA could possibly be match for managing pharmacy prices

There are lots of causes to contemplate a Take Command HRA to your small enterprise, mid-market firmor enterprise. Your workers get to decide on their very own well being plan from the ACA or state market. You get full finances management and predictability, and Take Command is your information for studying about and implementing the HRA you select.

In terms of managing pharmacy and GLP-1 prices, a Take Command HRA is a strategic transfer. It helps you to design your well being advantages plan with exacting specs, and it helps you to management your finances right down to the penny. You don’t cope with pharmacy profit managers in any respect, and GLP-1 dangers are out of the image.

For those who’re curious concerning the monetary advantages you would reap, join with a Take Command HRA skilledand we’d love to assist.

ICHRA for brokers

The world of medical insurance will get extra sophisticated (and costly) by the day. In case your purchasers are searching for an easier answer, contemplate ICHRA.

ICHRA for brokers

Maintain studying

Medical insurance threat administration

Medical insurance threat administration is all concerning the mindset (and the info). Employers are  questioning the established order and changing it with data-driven choices about well being advantages.

Why medical insurance threat administration is essential

What brokers want they knew earlier than their first ICHRA

We requested brokers who’ve been by it to share what they’d inform a colleague listening to about ICHRA for the primary time. Here is what they stated.

Brokers and their first ICHRA

Do you have to break up together with your group well being advantages?

For those who’re sad together with your group plan or simply inquisitive about different choices, listed below are some issues for shifting on and why an HRA is likely to be higher for your enterprise.

Switching from group medical insurance

Contact Take Command to find out about HRAs

Whereas pharmacy value administration is a good thing about HRAs—it’s solely the start. Join with a Take Command HRA skilled, and we’ll stroll you thru every little thing you should find out about prescription protection options and the wealth of advantages that HRAs present.

References

1. Enterprise Group on Well being. 2026 Employer Well being Care Technique Survey. August 2025. Accessible at: https://www.businessgrouphealth.org/sources/2026-Employer-Well being-Care-Technique-Survey
2. https://www.wtwco.com/en-us/insights/campaigns/insights-to-action-the-wtw-healthcare-financial-benchmarks-survey
3. https://www.aon.com/en/insights/reviews/the-global-medical-trend-rates-report
4. Evernorth Well being Companies. 2025 Drug Development Report: The GLP-1 Evolution and the 2026 Tipping Level
5. https://www.benefitspro.com/2025/01/13/state-becomes-first-to-add-wegovy-like-drugs-to-essential-health-benefits-package/
6. https://capitol.texas.gov/tlodocs/89R/billtext/html/HB02412I.htm
7. Part 514 of the Worker Retirement Earnings Safety Act of 1974 (ERISA)
8. https://www.ama-assn.org/health-care-advocacy/access-care/what-are-pharmacy-benefit-managers-pbms-and-why-we-need-reform
9. https://www.irs.gov/publications/p502
10. Inside Income Code Part 213(d)