LOCKTON'S POV
Pharmacy challenges grow in a complex environment
Pharmacy dynamics continue to intensify, driven by rising specialty medication unit costs and utilization, escalating brand drug costs, and expanding GLP-1 indications. These factors are shaping a complex, high-cost environment where plan sponsors must carefully balance access, outcomes, and affordability.
GLP-1s FOR WEIGHT MANAGEMENT: PMPM QUARTERLY GROWTH
Source: 2025 Trend Study; Lockton’s book of business
Since knowledge of GLP-1s for weight management became more prevalent in the marketplace in 2022, they've spurred intense cost growth, reaching an almost 840% per member per month (PMPM) increase in 2024 for employers covering GLP-1s for weight management.
Source: 2025 Trend Study; Lockton’s book of business
Now GLP-1s are being approved for additional indications across a range of clinical applications, including some beyond diabetes and weight management, which will have significant implications for employers in terms of cost, coverage, and employee access.
Following other recent expanded indications, including sleep apnea in adults with obesity, major adverse cardiovascular events (MACE) in adults with obesity, and chronic kidney disease in adults with Type 2 diabetes, a broad range of upcoming approvals are expected over the next couple of years. Some indications, like the recent FDA approval of Wegovy for the treatment of metabolic-associated steatohepatitis (MASH), won’t specify an associated clinical status of obesity or diabetes.
As the market evolves rapidly, thoughtful program design will be key, and plan sponsors will need to take compliance, member experience, and cost planning into consideration as coverage decisions become more complex to navigate.
Spotlight on lifestyle medicine
While 11% of employers plan to add GLP-1 coverage for weight management in 2026, according to Business Group on Health, overall trends remain mixed. Some are expanding access, while others are scaling back due to rising costs. Currently, less than a third of Lockton clients cover GLP-1s for weight loss. But employers who want to address high discontinuation rates and ensure positive long-term employee health outcomes should understand how effective lifestyle intervention interplays with GLP-1 usage. Although these drugs are the most costly compared with their two counterparts (diet and exercise) in a holistic weight health strategy, these lifestyle choices are equally important to long-term weight health outcomes.
Pharmacy complexity is growing beyond GLP-1s
Pharmacy cost growth will persist apart from the impact of GLP-1s, with pharmacy trend still at 9.3% in 2024 excluding the impact of GLP-1s for weight management. At a broader level, widespread retail pharmacy closures, shifting revenue models, and ongoing transparency concerns in the pharmacy space are reshaping opportunities in how pharmacy benefits are managed.
Since pharmacies often hope to break even on brand drugs while driving the bulk of their profitability through generics, even a slight shift in the proportion of brand vs. generic prescriptions can have significant consequences. This shift is contributing to pharmacy closures that are impacting access to care. We continue to see larger cost increases for brand medications each year, rising 24% in 2023 and 14% in 2024. Utilization continues to increase for specialty medications, which have accounted for over half of total pharmacy PMPM since 2022.
Read how pharmacy closures could impact employee health and benefit costs
While no generic GLP-1 alternatives for the weight management GLP-1s Zepbound or Wegovy will be available until the late 2030s at the earliest, biosimilars and generic launches are emerging that offer some favorable potential relief in other categories. Humira and Stelara, previously a plan's most expensive drugs, now face biosimilar competition, reducing rebates but also reducing net costs overall. Lower-cost generic forms of over a dozen high-cost oncology drugs are also expected over the next two years, with the largest financial impact expected in 2027.
As complexity grows and new drugs enter the market, finding ways to strengthen plan value and paying attention to opportunities for smart design will be key for plan sponsors. For example:
Paying attention to refill timing
An often-overlooked feature of pharmacy plan design is the refill-too-soon edit. The threshold plans typically set for how much of a prescription is used before it can be refilled varies by pharmacy channel and can be as low as 60%. When PBMs combine automatic refills with low refill-too-soon percentages, members could consistently receive excess medications during the plan year. To forestall the potential for waste that could have both clinical and financial impacts, employers should strive to balance the avoidance of possible waste with member convenience.
