No relief appears to be in sight for employers dealing with the steadily rising cost of
employee health benefits.
“Health plan cost trends continue to rise, with outpatient pharmacy benefits projected to continue seeing double-digit increases and medical benefits not far behind,” according to the 2026 Segal Health Plan Cost Trend Survey. “Inflation and regulatory shifts are straining plan sponsors’ ability to maintain competitive benefits and access to care.”
High demand, supply chain dynamics and policy-related factors are driving drug price inflation. A primary contributor is the lack of competition in the pharmaceutical market, especially for brand-name drugs protected by patents. Drug prices rose more than 5.5 times between 1985 and 2024, outpacing overall inflation by a factor of three.
Non-specialty drugs saw increases in the use of costly new therapies for chronic conditions such as diabetes, migraine headaches and mental health disorders. The use of new high-cost specialty drugs in place of lower-cost therapies also is driving price increase. Among the top cost drivers is a substantial growth in specialty drugs to treat conditions such as forms of dermatitis and psoriasis.
GLP-1 drugs have rapidly reshaped the prescription drug landscape in recent years because of their effectiveness in both glycemic control and weight management. Their expanded use for conditions such as sleep apnea and cardiovascular risk reduction have further increased demand and likely will result in this therapy class being a driver of pharmacy costs for the next several years.
Around 60% of plan sponsors cover GLP-1s for obesity management. In 2024, plans that covered GLP-1s for obesity management had a prescription drug rate increase of 14.8%, with GLP-1s accounting for 7.8% of that increase. Among plans that did not cover the drug for obesity, the rate was 9.2%, with 1% attributed to GLP-1s covered for diabetes.
The survey identified the top five strategies that respondents are using to mitigate pharmaceutical expenses without compromising the quality of care:
- Control the specialty drug mix through the use of biosimilar strategies.
- Implement strategies to address anti-diabetes and anti-obesity GLP-1s.
- Implement strategies for specialty drug management, such as site-of-care optimization, formulary management, copayment assistance and step-therapy management.
- Expand pharmacy-management programs, including quantity limits, prior authorization and step therapy.
- Adopt a custom or narrow drug formulary.
Economic uncertainty adds to the headwinds. The Trump administration has imposed tariffs on medical devices and supplies and is weighing additional tariffs on pharmaceuticals. These measures could intensify existing shortages, disrupt patient care and increase operational costs in the health care system. With so many cost factors beyond their control, employers need to keep a close eye on the things they can control.
“As treatments and workforce needs evolve, plan sponsors face growing challenges in assessing financial impact and coverage implications,” the report said. “To stay ahead, they must actively monitor industry trends and manage their benefit programs with precision.”
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