As drug costs rise, employers would like to see reforms extend to commercial space: Business Group

Paige Minemyer | Aug 23, 2023

The cost of pharmaceuticals is a key topic for policymakers on the Hill, and it should come as no surprise that it’s also a major concern for employers across the country.

The Business Group on Health released its annual survey of large employers this week and found that 91% are either concerned or very concerned about overall pharmacy cost trend. Alongside that finding, the survey identified that the median spending on pharmacy continues to grow, rising from 21% in 2021 to 24% in 2022.

In addition, 92% said they were either concerned or very concerned about high-cost drugs coming through the pipeline. Specialty pharmacy accounts for a growing portion of health spend, and orphan drugs for rare, complex diseases account for large swaths of products coming to market.

“Pharmacy is a spicy area,” said Ellen Kelsay, CEO of the Business Group, during a briefing with reporters Tuesday. “For sure, they are keeping a close eye on anything legislatively related to drug pricing.”

The survey found that 79% of employers are concerned or very concerned about expenses related to gene- and cell-based therapies, and 85% said the same about GLP-1 therapies for weight loss and diabetes. The latter, in particular, have become a hot-button issue of late for insurers and plan sponsors as demand swells, particularly for off-label use.

Other major concerns included the lack of transparency around rebates negotiated by pharmacy benefit managers, the complexity of the supply chain and the barriers to employers who want to audit the performance of the players in that supply chain, according to the survey.

Requiring PBMs to disclose their compensation and pricing was named as a transparency priority for 73% of the surveyed employers. In addition, 28% said they’d like to see transparency requirements around the cost of developing certain drugs.

Kelsay said many of the changes that have gained traction in Congress, particularly those that would allow for greater transparency, are backed by the Business Group and its members, which are mostly large firms.

However, she noted that many of the proposals would extend only to Medicare, which could lead to unintended consequences in the commercial market. Drugmakers, for instance, could look to make up for losses in Medicare’s drug price negotiation by charging commercial payers and plans more, she said.

“We certainly would like to see some of those pricing reforms apply more broadly,” she said.

Source: Fierce Healthcare

https://www.fiercehealthcare.com/payers/drug-costs-rise-employers-would-see-reforms-extend-commercial-space-business-group