Consumer / Employer

High-cost Pharmacy Claims, Medical Inflation Among Top Threats for Employers

When asked what the biggest threats facing them were, 94% of employers said high-cost pharmacy claims, 91% said medical inflation and 91% said million dollar treatments being approved by the FDA, according to a new survey from the Midwest Business Group on Health.

The biggest threats employers are facing right now include high-cost pharmacy claims, medical inflation and million dollar treatments being approved by the Food and Drug Administration, according to a survey released Wednesday.

The report was conducted by the Midwest Business Group on Health, a nonprofit that represents large employers on health and benefits policy. The survey was conducted online at the end of 2022 and included responses from 57 self-insured employers.

When asked to name their biggest threats, 94% of respondents said high-cost pharmacy claims, 91% said medical inflation and 91% said million dollar treatments being approved by the FDA. Other top concerns included specialty drug spending and the cost of specific diseases and conditions.

Top threats to employers continue to be high-cost pharmacy claims and managing specialty drugs. As such, employers must focus on watching the hen house by making sure to audit their carriers and PBMs for high-cost pharmacy claims,” said Cheryl Larson, president and CEO of Midwest Business Group on Health, in an email.

When it comes to employers’ strategies for managing pharmacy benefit costs, 74% said they are managing specialty drugs through payment reform, 72% said they are directing members to lower cost drugs and 66% said they are optimizing pharmacy benefit manager contracts.

“We’ve seen a significant increase in employers requiring their PBM contracts are clearly defined and optimized to benefit them, not just the PBM,” Larson said. “By clarifying the PBM roles, responsibilities and removing functions that allow for misaligned incentives, such as ensuring the pass-through of all rebates and fees, they can also meet their fiduciary responsibility.”

Another 81% of respondents said market-based and government reform must happen to improve the pharmacy drug market.

Other findings from the report include:

  • When asked for their top health benefit priorities, 96% of employers listed engagement in programs, 94% said health benefit communications, 93% said financial wellbeing, 93% said wellness and wellbeing, 91% said chronic condition management, 91% said preventive services and 91% said specialty drug management.
  • Employers have multiple strategies for addressing mental health benefits, including offering no- or low-cost telehealth counseling (74%), conducting manager training (56%) and providing flexible work schedules (52%). 

“Cost is still king and more employers are putting in programs at a quick pace to control healthcare expenses,” Larson said. “For example, employers are offering no or low-cost mental health virtual counseling as an affordable way to reach employees and remove barriers to care. We have come a long way in recognizing the need to be innovative with health benefit offerings and it’s important that telehealth legislation continues to support that.”

Picture: Feodora Chiosea, Getty Images

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