Wegovy weight loss prescriptions rose by 619% between December 2022 and May 2023. That resulted in 250% increase in costs for employer health insurance in the first two months of 2023 compared to all of 2022, according to Willis Towers estimates. The cost to employers of insuring those covered by their health plans could rise by 50% if only half of eligible employees use such drugs.
MIRACLES COST ADDITIONAL MONEY
Drug companies are increasingly developing drugs that solve many of mankind’s most difficult problems. Tackling the epidemic of obesity in the USA has a significant benefit to society and in the long run may reduce spending on health benefits by eliminating the consequences of obesity. New drugs to fight cancer, heart disease, and some of the largest health problems are in development.
Spending for the top 5 prescription drugs in 2023 excluding Wegovy is forecasted at 12 percent of total prescription drug spending for the year. All 5 are recent advances.
PRIVATE EMPLOYERS WILL PAY HIGHEST PRICE
The government will negotiate discounted rates for these new drugs. Private employers will bear a disproportionate amount of the spending on these drugs. As an example, private insurers, on average, pay about 199% of the Medicare rates for all hospital services.
PRIVATE EMPLOYERS DEPEND ON GREEDY PBM’S
Private employers use Pharmacy Benefit Managers [PBM’s] to manage their prescription drug programs and pricing. Three major companies dominate the market – CVS Health (Caremark), Cigna (Evernorth/Express Scripts), and UnitedHealth (Optum Rx) - which hold a combined market share of around 80 percent.
PBM’s make higher profits from higher drug spending. Between 2017 and 2019, pharmacy benefit managers' gross profit increased by 12 percent according to a report released by the PBM Accountability Project. The report said PBMs benefit directly from high drug prices as several revenue sources are linked to drugs' list prices.
EMPLOYERS SHOULD TAKE AN ACTIVE ROLE IN HEALTH BENEFIT MANAGEMENT
Self-insured employers can actively manage their pharmacy costs by working with specialist 3rd parties whose goal is to save cost. A small growing number of self-insured employers are dumping the easy route of the status quo and achieving significant savings.
GOVERNEMENT LEADERSHIP NEEDED
There are no easy answers to managing the wonderful new pharmaceutical solutions and their staggering costs. We need to consider issues of social equity, compassion, preserving our capitalistic markets and cost. We need to hammer out compromises that give our nation the best deal. Our leaders have not addressee this truly enormous challenge.