Health Plans Face Pharmacy Cost Surge

Employer healthcare costs are accelerating at a pace that threatens the balance of coverage, affordability, and sustainability. The Business Group on Health’s 2026 Employer Health Care Strategy Survey found that pharmacy spend is projected to rise 11 percent in 2025 and 12 percent in 2026, and nearly a quarter of employer health spending already goes to pharmacy. This is the steepest cost trajectory in more than a decade.

The surge is not driven by one factor. Stat News reports that GLP-1 medications, cancer therapies, and expanding mental health utilization are reshaping employer spending patterns and forcing new approaches to benefit design. GLP-1 coverage is especially volatile. Broad access can generate value for members and potential long-term health gains, but it risks near-term cost spikes. Restrictive approaches may control expenses but create tension with employers, regulators, and members. Oncology adds another layer, as cell and gene therapies carry extraordinary cost burdens that are difficult to forecast. Mental health continues to grow in demand, reflecting both member need and employer pressure for broader networks and services.

The Business Group on Health also highlights rising calls for transparency in PBM pricing and contracting, a theme echoed across industry coverage. As employers push for solutions, plans will need to demonstrate more value-oriented models that link pharmacy spend to measurable health outcomes.

For health plan leaders, this is no longer a narrow pharmacy management issue. The implications reach into pricing strategy, reserve planning, and employer trust.

Recommended Action Steps for Health Plan Leaders

• Reevaluate GLP-1 coverage policies to balance near-term affordability with long-term clinical impact.
• Develop oncology cost strategies that include outcomes-based contracts and high-cost case forecasting.
• Expand access to mental health networks in ways that align with employer expectations while managing utilization.
• Audit PBM contracts for transparency and consider renegotiating rebate structures.
• Model financial exposure under different pharmacy spend scenarios to guide pricing and reserve strategies.
• Engage employers proactively with clear communication on how plan design decisions are made and how costs are being managed.

If you'd like to schedule a complimentary consultation on how we've helped our client organizations identify leadership talent to mitigate escalating pharmacy costs, please feel free to access my calendar here to book a call. 

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