Inflators: Drug spending is rising with a wave of new therapeutic drugs collide with the market
Drug spending in the US increased to $487 billion (11.4%) in 2024 at net manufacturer prices in 2023 to $487 billion, up from $20 billion (4.9%) in 2023.
Among the many innovative therapies developed and launched by pharmaceutical companies, GLP-1 drugs continue to be considered the best cost inflator by health plans. They are projected to account for 0.5% to 1.0% of the estimated healthcare cost trend in 2026. To manage costs and improve treatment outcomes, many health plans tighten clinical standards and limit step therapies for the use of GLP-1 weight management. While these weight loss drugs may prevent expensive health problems in the future, as many consumers abandon the drug within a year of starting treatment, compliance and sustained benefits from true behavioral modification have proven to be a challenge.
Many health plans we interviewed expressed concern about the financial risks posed by cell therapy and gene therapy (CGTS).
Act Now: Overall, health plans and employers should continue to evaluate strategies and partners to improve the benefits of pharmacies, allowing them to utilize innovative and transparent models both from the PBMS and the growing PSA (PBA) segment. A wide range of technologies and AI-enabled solutions are emerging to improve efficiency, reduce waste, and optimize costs. Strategies such as plan-based contracts and strengthening prior certification standards should continue to be considered within the entire class and within GLP1. To maintain the health benefits of weight loss medication, health plans should consider a more stringent integration of GLP-1 coverage with wraparound services such as patient-oriented nutrition counseling, behavioral coaching, and digital weight management tools. Agility is the term health planning clock with pipeline monitoring, scenario modeling, and policy adaptability to predict the impact of increased utilization and budgets.
To manage CGTS financial risk, health plans should explore innovative reimbursement models such as outcome-based rebates, milestone-based payments, and switching partnerships.
