Pharmacy Value Management

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

If you happen to’re an employer feeling the strain of rising pharmacy prices, you’ve received firm. Employers all through the U.S. are combating rising medical insurance premiums in response to skyrocketing prescription prices coupled with unprecedented use. Earlier than we dig into the small print (and options), let’s check out some numbers.

Stats for employers to find out about pharmacy price management

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

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

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

4. New gene therapies for circumstances like sickle cell or muscular dystrophy carry value 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 whole drug prices.²

The GLP-1 spend tsunami

The associated fee 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 precipitated 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 price, and three) there are lots of people taking them. 

In reality, 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 might have a prescription that prices $12,000–$18,000 per yr.^3,4

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

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

North Dakota is addressing the problem 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 remedy 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 may face rising premiums for stop-loss insurance coverage if they’ve a big proportion 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 function in prescription drug prices. They resolve the listing of medication an insurance coverage coverage will cowl (the formulary), they usually negotiate reductions (known as rebates) with drug makers in trade 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 ought to be PBM reform,⁸ it could possibly be a far-off answer.

Pharmacy profit options: Tips on how to negotiate price financial savings

If you wish to proceed working along with your PBM, negotiating your contract is step one in price financial savings. A number 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 prices 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 all the drug producer rebates as an alternative of passing these financial savings again to the employer (giving the PBM a kickback). Rebate retention is commonly hidden beneath phrases similar to administrative charges, knowledge sharing charges, or value 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 price. NADAC is the Nationwide Common Drug Acquisition Value; it’s the most clear benchmark and displays real-world market prices. AWP is Common Wholesale Value, and it’s what most PBMs use. The issue? AWP is commonly known as “Ain’t What’s Paid” as a result of it’s an inflated listing value that probably comprises hidden markups. 

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

HRAs as a pharmacy cost-control answer

Within the combat for medical insurance threat administration, HRAs are surfacing as a extremely efficient answer. They’re designed to assist employers management their funds and for workers to have flexibility and selection.

Listed below are among the predominant 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 permitted as a professional medical expense,⁹ and the listing is in depth. Whereas an employer does have authority to decide 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, however it offers an summary of medicines which are reimbursable with an HRA. Employers have management over their design plan and might tailor coated medicines.

Ache and allergy reduction

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

• Movement illness: Dramamine or medicated wristband

First assist 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 displays, and pulse oximeters

Respiratory and chilly/flu

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

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

Menstrual care merchandise

Sexual well being and household planning

• Contraception: Contraception drugs (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 particular analysis to be eligible for HRA reimbursement.

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

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

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

FSA vs HRA for prescriptions

Folks 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 shouldn’t be apples to apples since they’re totally 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 an excellent match for managing pharmacy prices

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

With regards to managing pharmacy and GLP-1 prices, a Take Command HRA is a strategic transfer. It allows you to design your well being advantages plan with exacting specs, and it allows you to management your funds all the way down to the penny. You don’t take care of pharmacy profit managers in any respect, and GLP-1 dangers are out of the image.

If you happen to’re curious concerning the monetary advantages you would reap, join with a Take Command HRA knowledgeable, and we’d love to assist.

ICHRA for brokers

The world of medical insurance will get extra difficult (and costly) by the day. In case your shoppers are searching for a less complicated answer, take into account 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 selections 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 mentioned.

Brokers and their first ICHRA

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

If you happen to’re sad along with your group plan or simply interested by different choices, listed here are some concerns for transferring on and why an HRA is likely to be higher for what you are promoting.

Switching from group medical insurance

Contact Take Command to study HRAs

Whereas pharmacy price administration is a good thing about HRAs—it’s solely the start. Join with a Take Command HRA knowledgeable, and we’ll stroll you thru every thing you want to 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/assets/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 Revenue 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. Inner Income Code Part 213(d)