Prescription drug costs are no longer a side issue in employer health plans. In 2026, they are a budget driver, especially for specialty medications and GLP-1s.
TL;DR: Employers can control pharmacy spend without hurting care, but only if they treat pharmacy as a year-round strategy. Better Formulary design, higher generic and biosimilar use, clearer PBM contracts, and tighter GLP-1 oversight all matter.
Key Takeaways
- Specialty drugs create the biggest pressure because a small number of claims can reshape the whole budget.
- Generics and biosimilars can lower spend when plans place them in preferred positions and make them easy to choose.
- PBM transparency matters because hidden markups and unclear rebates can distort real drug costs.
- GLP-1 coverage needs clear clinical rules, especially as demand keeps rising.
- JA’s point of view is simple: decisions should be data-driven, measurable, and tied to both cost control and employee experience.
What is driving prescription drug costs higher for employers? #
Pharmacy is taking a larger share of employer health dollars, and most leaders expect that pressure to continue. Recent 2026 reporting from SHRM and other national cost outlooks shows pharmacy trend running ahead of medical trend for many plans.
A big reason is Specialty Drug growth. Through 2025, specialty medications grew at about an 8% annual rate, and they now account for a large share of pharmacy spend. Yet they make up only a small share of prescriptions.
Here is the cost picture in simple terms:
| Driver | What employers are seeing |
|---|---|
| Specialty drugs | About 2% of prescriptions but roughly 60% of pharmacy spend |
| GLP-1 medications | High monthly cost and rapid demand growth |
| Brand drug inflation | Higher unit prices and slower generic relief in some classes |
| New therapies | More high-cost treatments entering the market |
When a plan pays for a few high-cost drugs over many months, pharmacy trend can jump fast.
This is why pharmaceutical-costs feel harder to predict than they did a few years ago. One new therapy, one high-cost diagnosis, or one change in utilization can move the numbers more than leadership expects.
Specialty drugs are expensive because small use can create large claims #
Specialty drugs are often used for cancer, autoimmune conditions, and rare diseases. These medications may require special handling, close monitoring, or ongoing use for months or years.
That matters because the cost per script is so high. A plan can have stable utilization across most drugs, then see one or two specialty claims shift the whole year.
For finance leaders, that means volatility. For HR teams, it can mean harder employee conversations. For the member starting cancer treatment or managing a lifelong condition, access still matters. That balance is why strategies for controlling specialty drug expenses need more than a renewal conversation.
GLP-1 demand is adding a new layer of cost pressure #
GLP-1 drugs have changed pharmacy projections across the market. They are effective for certain patients, but they are also expensive and often used long Term.
The user question points to an important benchmark: about 34% of employers cover GLP-1s. At the same time, 2026 reporting shows many large employers are rethinking weight-loss coverage because these drugs can run around $1,000 per month per member.
The issue is not only price. Demand is broad, public awareness is high, and employee interest can spike quickly. Therefore, even employers with solid pharmacy management can see sudden budget pressure once coverage expands. The next step is not panic or blanket exclusion. It is disciplined Plan Design.
How smarter formularies can lower costs without hurting care #
A Formulary is one of the clearest ways to guide better purchasing choices. Yet many employers leave it mostly unchanged until renewal, which can waste savings and confuse employees.
A stronger approach is to review the Formulary often and align it with clinical value, Net Cost, and member disruption risk. That creates a more stable plan and a clearer member experience.
Move generics and biosimilars into preferred positions #
When a lower-cost option is clinically appropriate, the plan should make that option the easiest one to access. That is where preferred tiers, Step Therapy, and prior authorization can help.
Generics are still one of the best cost controls in pharmacy. Biosimilars matter even more in specialty categories because the dollar amounts are so large. A modest shift in adoption can create meaningful savings.
For example, some biosimilars can reduce Specialty Drug costs by 15% to 35%, depending on the class and contract terms. That will not solve every pharmacy problem, but it can materially lower trend when applied well.
The key is discipline. Formularies should reflect clinical guidance first, then reinforce lower Net Cost choices. Plans that review this carefully are more likely to protect both access and spend over time.
Use lower copays to make better choices easier for employees #
Employees often follow the lowest out-of-pocket option. That is normal behavior, and Plan Design should work with it.
Lower copays for preferred generics and biosimilars can raise adoption without forcing abrupt disruption. This is more effective than relying on restriction alone because it pairs savings with a clear member signal.
Communication matters here. If employees do not understand why one drug costs less than another, they may assume the cheaper option is lower quality. HR teams need plain-language support that explains when drugs are clinically similar and why the plan prefers one choice.
That kind of clarity builds trust. It also reduces frustration at the pharmacy counter, which is often where benefit strategy becomes personal.
Why PBM contract transparency matters more than ever #
Many employers still cannot see the true Net Cost of their drugs. PBM pricing can hide Spread Pricing, Rebate retention, dispensing markups, and Specialty Pharmacy margin in ways that make reporting look cleaner than reality.
In 2026, that level of opacity is harder to accept. Leaders want more accountability because pharmacy spend is too large to manage by summary report alone.
Direct PBM contracts can uncover hidden markups and Rebate gaps #
A direct PBM contract can help employers define who keeps rebates, how specialty drugs are priced, and what the plan actually pays after discounts. Pass-through models can improve visibility, although contract language still matters.
This is especially important in specialty drugs and in certain generic categories where markups can be extreme. A plan may appear to have a solid discount while still paying more than expected on the back end.
Clearer contracting supports better governance. It also gives finance teams a cleaner basis for forecasting and gives HR leaders a stronger story when they explain benefit changes.
The right reporting helps leaders track measurable outcomes #
Good reporting should go beyond top-line trend. Leadership teams need data they can act on.
A strong pharmacy dashboard should track generic dispensing rate, biosimilar uptake, specialty trend, top drug classes, Net Cost by drug, and GLP-1 utilization. It should also show member disruption risk before changes go live.
JA’s view is consistent here: better decisions require better knowledge. That is why benchmarking matters. Using mid-market employee benefits data can help employers compare plan performance, spot outliers, and focus on measurable outcomes instead of guesses.
A practical plan for managing GLP-1s and other high-cost drugs #
Leaders do not need a one-time fix. They need a practical framework that works this year and still holds up later.
That framework should protect the plan, support people who truly need treatment, and give the organization a clearer success journey over time.
Use utilization reviews to support appropriate GLP-1 use #
When a plan covers GLP-1s, Utilization Review is essential. Prior authorization, diagnosis checks, reauthorization rules, and clear clinical criteria all help confirm appropriate use.
These controls are not about blanket denial. They are about matching coverage to the member’s clinical need and the plan’s intent. For diabetes treatment, the criteria may differ from weight management. Reauthorization rules also matter because long-Term use can create major cost exposure.
Without these checks, demand can expand much faster than expected. With them, employers can support access while keeping the plan grounded in clinical and financial discipline.
Build a pharmacy strategy that is reviewed all year, not once at renewal #
Pharmacy strategy should not sit on a shelf until the renewal meeting. Employers need regular review of Formulary performance, PBM terms, specialty claims, employee communication, and member disruption risk.
This is where JA’s approach is useful. Listen first. Assess the data. Communicate clearly. Then execute and measure what changed. That creates accountability and better ROR (Return on Relationship) across leadership, HR, finance, and the employee population.
It also helps employers plan renewal from a stronger position. A year-round review process creates more control than a last-minute negotiation, much like these annual employee benefits renewal strategies show in broader plan management.
Prescription drug costs will stay under pressure, especially in specialty categories and GLP-1s. Still, employers have more options than many think.
Better Formulary design, stronger generic and biosimilar adoption, thoughtful incentives, transparent PBM contracting, and tighter GLP-1 oversight can all lower spend while protecting care. When strategy is clear and data is actionable, cost control and employee support can move together.
That is the standard worth holding in 2026 and beyond: measurable outcomes, clear accountability, and a long-Term partner mindset that keeps both budgets and people in view.
