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Navigating the Pharmacy Benefit Landscape: Understanding Current Trends Impacting Your Bottom Line (Part 1)

Joey Stoffer January 10, 2024

The landscape of pharmacy benefits for employers with self-funded plans is undergoing seismic shifts, driven by several major trends that have substantial financial implications.

Based on a review from the Kaiser Family Foundation of over 3,911 drugs, over 50% experienced price increases at or above the rate of inflation between 2019 and 2020. This directly corresponds to increases in costs for both members, employer plans and payers of all forms who shoulder a considerable portion of these expenses.

Another critical trend is the advent of biosimilars, which are generic versions of biologic drugs. While these alternatives hold promise for cost savings, their high development costs and complex manufacturing have limited their impact. A study published in the Journal of Managed Care & Specialty Pharmacy estimates that the adoption of biosimilars could generate cost savings of up to $54 billion over the next decade. They could help self-funded employers mitigate rising pharmaceutical expenses, however, regulators and low adoption rates present challenges.

Finally, the insulin cliff poses a significant concern for employers with self-funded benefits. As the patent exclusivity for some insulin formulations expires, the market is expected to see an influx of biosimilar and generic alternatives. This has resulted in price reductions ranging from 70% to 75%, according to a study by IQViA. However, the timeline for these savings to materialize remains uncertain, presenting a challenge for self-funded employers managing budgets now.

The advisors at Oswald Companies can help you navigate the complexities of pharmacy benefits. We’ll analyze your current benefits and needs to find the right coverage for your employees and your budget.

Related Content:

Navigating the Pharmacy Benefit Landscape: What to Expect in 2024 (Part 2)

Navigating the Pharmacy Benefit Landscape: Evaluating Your Needs (Part 3)

To learn more, please contact me below or learn more on our Employee Benefits page.

Employee Benefits | Joey Stoffer