A new economic headwind is dominating HR conversations with their advisor and peers: Tariffs. As businesses continue to contend with inflation, wages, supply chain fragility, and other uncertainties, tariffs can amplify pressure even without directly increasing costs themselves. This makes strategic cost containment even more important for employers trying to maintain stability and competition. A major cost center rich in opportunity? Pharmacy benefits.
Benefits are typically a top-three line item for employers, and pharmacy spend is one of its fastest-growing components, with estimates putting specialty spend as high as 63% of the fuller drug cost. Pharmacy benefit spend is complex by design, with formularies that prioritize rebates and high-cost, low value medications as part of the legacy PBM structure. But there are strategies that help both employers and members save money – essential in this time of uncertainty and change.
Benefits advisors and employers, here’s how to keep benefits robust without sacrificing patient choice:
Technology at the point of care
Today, most consumers navigate a fragmented, opaque prescription process, limited by a traditional PBM model that can obscure pricing and restrict choice. But the moment the prescription is written is pivotal for controlling costs. It is a moment ripe for opportunity. That’s where member empowerment tools come in.
All-in-one digital experiences are available now that provide visibility into drug price, in cash or with insurance, pharmacy choice, and drug alternatives — all at the point of care. This offers members the choice and control to make decisions that can improve adherence and reduce overall drug spend — not just for themselves, but for the plan, as well.
For example, if a member knows that a similar drug available on their plan is significantly less expensive and equally effective, more than half the time, they will ask the prescriber for the alternative drug. When members understand their options, they’re more likely to avoid costly surprises at the pharmacy counter.
This isn't just a win for cost savings, it's also a boost for member satisfaction and engagement.
Take a drug list management approach to rebate-driven formularies
One of the fastest paths to cost savings is improving how your drug list — or formulary — is structured. Many plans include medications that are clinically outdated, have equivalent generics, or simply don’t deliver meaningful health outcomes relative to their price. But moving to a drug list management approach helps bring focus.
Broader drug lists generally cost more, and as employers tighten the list to exclude low-value or redundant drugs, costs can be reduced immediately and sustainably. Importantly, this does not mean removing necessary medications. A drug list approach allows for balance between access and appropriateness by ensuring that medications covered are clinically appropriate and cost-effective. Clinical reviews and regular updates to the formulary help keep care aligned with the latest evidence, while also protecting plan budgets.
A good consultant and pharmacy benefits partner will also consider the impact of timing, i.e., moving to a biosimilar when it is available, rather than waiting.
Enact rigorous utilization review
Utilization management has long been part of pharmacy benefit strategy, but its effectiveness depends on how it’s implemented. Rather than blanket restrictions, today’s most effective programs use precision reviews to identify where overspending is occurring and apply clinical best practices to correct it.
That means deploying targeted prior authorizations, step therapy protocols, and other tools that guide appropriate use. The goal is to avoid unnecessary or duplicative treatments while making sure patients get the medications they truly need.
For example, we’ve been able to help one of our pharmacy benefits customers reduce their GLP-1 claims and utilizers by about 30% using appropriate utilization and managing to label, with a rigorous prior authorization process.
Rigorous doesn’t mean restrictive; it means thoughtful, data-driven oversight that protects both the patient and the plan.
A strategic response to economic pressure
While the impacts of tariffs vary by industry, the broader message is clear: Costs are rising, and employers need innovative approaches to stay ahead. Employers who take a proactive approach to pharmacy benefits now can help future proof themselves for variables, from global markets to domestic policy shifts. The good news? These changes don’t require a total overhaul; just a willingness to embrace smarter, member-focused pharmacy benefit strategies.
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