2024 Will See Higher than Normal Employer Health Cost Increases – What Actions Can You Take to Control Costs?

By Team PCM | Jan 24, 2024 | Blog post, Pharmacy Benefits, Plan Management

Health costs will increase between 5.2% and 8.5%.

The cost to cover a family is $24,000.

Drug costs will go up nearly 10%, with specialty drugs increasing nearly 15%.

The numbers change, but the one thing that remains constant is that health costs increase every year. Like clockwork each fall and winter, health and benefits industry experts publish surveys and reports that capture the current state of health costs and predictions for the coming year. These published resources provide a baseline and explore important themes everyone in the employee health plan industry can use as a foundation for benefits management and planning.​

The challenge is to synthesize this constellation of data points into a cohesive view – the big picture. In other words, to see the forest for the trees.

Employers and their broker, consultant, TPA, and other health plan partners work side-by-side to offer valuable health coverage for employees and members while struggling to control ever-spiraling costs. Building, adjusting, re-building, and managing a health plan requires near-constant monitoring and using all available tools. An aggregate view of industry expert surveys and reports is one such tool.

Prescription Care Management pulled together 10 of the industry’s most respected surveys and analyst reports from publicly available sources to compile information for a January 2024 webinar.  These sources included:

• Mercer
• Kaiser Family Foundation
• National Business Group on Health
• Segal
• WTW
• IFEBP
• PwC
• Aon
• Milliman
• Trilliant Health

While each report offers a different view, based on the number, type, or size of employers surveyed or the specialized database used, some general themes were unearthed. Here are three major topics presented:

1. Health costs will increase more in 2024 than in recent years.

The key drivers of costs are those we have seen in the news over the past few years. Inflation will catch up with healthcare this year, resulting in higher prices for virtually everything used in providing care. Health industry workforce shortages will drive up labor costs for hospitals and other care sites. Medication cost increases will be passed along to payers, which hits employers and plan sponsors especially hard.

2. Specialty drugs are driving up costs for every health plan.

In survey after survey, a consistent message was the challenge of rising specialty drug costs. The National Business Group on Health reported that 91% of those surveyed list specialty drugs as a top concern. They also detail that drug costs now represent 24% of total health costs. Segal adds to this topic by reporting that specialty drugs now represent 55% of drug spending. With virtually every eye in the industry looking at GLP-1 costs for treatment of obesity, specialty is top of mind. Trilliant reports that 33 incredibly expensive cell and gene therapy drugs, primarily for cancer treatment, will launch by 2027. Specialty will remain the hottest of health cost topics for years.

3. No silver bullet solutions.

Running throughout the collected industry health cost reports is a theme that sits just below the surface. There is no one perfect solution! Mercer points out that 28% of employers offer member navigation and advocacy services. And 49% offer at least one point solution for chronic conditions. WTW added to this theme by reporting that 32% of employers put vendor health plans out to bid each year. From managing the health plan to payers to technology to program vendors, employers and plan sponsors are seeking solutions from their partners. The reality is there is no perfect solution, and those that do the best at controlling costs rely on a comprehensive benefits management strategy that includes a number of solutions and proven vendor partners.

Pulling these resources together into one cohesive resource is only part of the job. Providing insights and actions to take is the real value these tools can provide. Whether you are an employer, plan sponsor, consultant, broker, payer, or other industry expert, we invite you to access any of the report source links below or view our January 2024 webinar: Take Action: Use 2024 Employer Health Cost Projections to Strengthen Your Benefit Management Strategy.

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Prescription Care Management is a health tech company dedicated to simplifying pharmacy and medical plan management for brokers, TPAs, PBMs, Rx consultants, and self-insured plans. With claims-level analytics and insights, PCM’s platform validates plan spend, guarantees, and rebates with a few clicks. To learn more about partnering with PCM, click here.

Pharmacist: Biosimilar Adoption Impacts Patients and Plans in 2024

By Team PCM | Jan 24, 2024 | Blog post, Pharmacy Benefits, Plan Management

Is 2024 going to be the year of biosimilars? Recently, biosimilars have emerged as a transformative force in the healthcare industry, offering cost-effective alternatives to expensive biologic drugs. As drug prices continue to rise, biosimilars could be the key to helping patients receive more affordable care. 

There are currently 44 biosimilars approved by the U.S. Food and Drug Administration, with the approval trends rising as manufacturers try to get ahead of the curve. For example, adalimumab, a biologic used to treat arthritis, already has 15 biosimilars in development. In 2022 alone, biosimilars saved $9.4B, allowing 344 million people to receive therapy otherwise unavailable without biosimilar competition. 

Dr. David Merritt, PharmD, RPh, Chief Pharmacist for Prescription Care Management, explains, “Biosimilars can provide patients with lower cost alternatives, making treatments more affordable and accessible without compromising quality of care.”

Biosimilars affect patients and may lead to lower health costs for self-insured health plans. Because biosimilars are much more cost-effective than their brand-name counterparts, patient adherence could improve, lowering plan pharmacy spend and expenses associated with hospitalizations and follow-up care for chronic conditions. 

What are the prospects for biosimilar adoption? 

According to Cardinal Health, by 2025, biosimilars will reduce U.S. drug spending by $133B. However, the complexity of the market impedes consistent adoption. A lack of familiarity with biosimilars could cause providers and patients more comfortable with traditional drugs to hesitate to accept biosimilars as viable alternatives.  

“Biosimilars have been proven as safe and effective as the originator biologic and are offered at a reduced price,” explains Dr. Merritt, “However, demand for the product has been slow to shift from the original biologic, especially when clinicians and patients do not regard the products as clinically equivalent even though they have been proven safe and effective.”

Open policies and better education are important in overcoming this hurdle.

“Promoting policies that will simplify the ability of health plans to switch a sufficient share of patients to biosimilars would increase adoption,” says Dr. Merritt, “Additionally, more education of patients and clinicians on the safety and efficacy of biosimilars is necessary.”

Rebates are also hindering biosimilar adoption. Biosimilars are subject to rebate walls, also known as rebate traps. Drug manufacturers pay discounts to self-insured plans or PBMs on the original biologic drugs, resulting in those drugs getting prioritized on the plan’s formulary. 

Even if a biosimilar has a lower net cost than a rebated drug, plans are likely to exclude it simply because of rebates, reducing patient accessibility and plan savings.

“The key to getting more biosimilars included in formularies is to break down the rebate walls as they did with generic drugs,” emphasized Dr. Merritt. “Rebate walls decrease the opportunity for a patient to use a lower-cost biosimilar product while also decreasing the chance to reduce plan costs.”

Another way to increase biosimilar use and acceptance in formularies is to decrease the regulatory hurdles to gaining an interchangeable designation. 

“The interchangeable designation allows pharmacy substitution without explicit authorization by the prescriber,” Dr. Merritt explains, “This would allow for market growth like what we are already experiencing in the generic drug marketplace.”

Biosimilars represent a promising frontier in the healthcare industry, offering a pathway to increased access, cost savings, and innovation. Will we see more mainstream applications for them in 2024?

Dr. Merritt sees a future with widespread biosimilar adoption, but it will take some work.

“Getting more biosimilars included in formularies means breaking down rebate walls, promoting policies that simplify the ability of health plans to switch a sufficient share of patients to biosimilars, educating patients and clinicians, and decreasing regulatory hurdles to gain the interchangeable designation,” summarizes Dr. Merritt, “With these things in place, the biosimilar market will continue to grow, providing more patients with greater accessibility, better therapeutic care, while lowering patient and healthcare plan costs.”

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Crafting a benefits strategy that balances cost and clinical outcomes is complex. Prescription Care Management (PCM) does the work for you. To see how PCM is helping self-insured plans achieve the lowest net cost through rebate management, click here.