The high-cost environment continues
Healthcare costs continue to increase at high levels year after year
Combined medical and prescription drug trend reached 7.7% in 2025. While the overall trend has become more consistent, it has settled at a higher level than historical ranges.
Employers are now managing several consecutive years of elevated healthcare cost increases, with continued pressure from both medical and pharmacy costs.
As these higher trend levels persist, the challenge is not simply managing another year of cost increases. Employers must find ways to manage sustained cost pressure while continuing to invest in their people, remain competitive, and maintain affordable benefits.
WHAT DO “COST PER UNIT” & "UTILIZATION" MEAN?
Healthcare trend measures year-over-year cost changes, which are shaped by both unit cost and utilization. The impact of each provides important context for what is driving the overall increase.
Unit cost reflects changes in the price that is paid for healthcare services and medications, while utilization reflects changes in the amount of care being used.
HISTORICAL TREND
Source: 2026 Lockton Trend Study
What’s currently keeping cost trends elevated?
Healthcare services are becoming more expensive, while employees are continuing to use more care.
Expensive medications present different cost challenges
High-cost therapies continue to put pressure on employer health plans as prices rise, but they can vary in how they affect overall health plan costs. Understanding these differences is important when evaluating how to manage each.
GLP-1s and cell and gene therapies are two prominent examples. Weight management GLP-1s are creating broader, ongoing cost pressure, while cell and gene therapies remain very rare but can result in multimillion-dollar claims.
GLP-1s FOR WEIGHT MANAGEMENT: PMPM QUARTERLY GROWTH
Source: 2026 Lockton Trend Study
The cost impact of obesity is substantial, and as obesity rates approach 50% among working-age Americans, interest in GLP-1s is high.
The challenge for employers, as the fiduciary of their plans, is how to manage the cost-effectiveness of treatment. Obesity is a complex disease that requires specialized care, and GLP-1s are indicated as ongoing treatment in conjunction with intensive lifestyle intervention.
GLP-1 cost continues to climb
to
allowed cost, PMPM
Since knowledge of GLP-1s for weight management became more prevalent in the marketplace in 2022, these drugs have spurred intense cost growth. Allowed PMPM cost rose from $2.41 to $29.33, roughly a 1,100% increase.
GLP-1s also contributed 1.8 percentage points to overall prescription drug trend in 2025.
Should I remove GLP-1 weight loss coverage because of high costs?
It is critical to take a holistic view when evaluating the savings associated with making pharmacy benefits changes as they can often trigger rebate impacts and/or may impact the entire contract and pricing terms. Rebates and member cost share can materially reduce the amount ultimately paid by the employer. This distinction is important when evaluating GLP-1 coverage. Removing coverage may reduce paid claims, but those savings should not be viewed in isolation. Changes in GLP-1 utilization can affect associated rebates and may also affect other rebate guarantees, contractual terms, or pricing within the broader PBM arrangement. Employers considering coverage changes should evaluate the net financial impact across the pharmacy benefit rather than assuming the reduction in claims represents the amount they will save.
Can I cover GLP-1s through direct-to-employer channels instead?
Employers considering alternative pathways for weight-loss GLP-1 coverage outside the traditional pharmacy benefit should be aware of strategies that include direct-to-consumer (DTC) and direct-to-employer (DTE) channels. These strategies allow employers to bypass traditional PBM coverage and instead contract directly with manufacturers to obtain medications at known, predictable costs. However, these programs vary in how they are administered and often bypass clinical oversight and lifestyle management. Employers considering these approaches should evaluate them based on total net cost and from a utilization and clinical management perspective and consider integration fees and the potential impact on member out-of-pocket costs, deductibles, and rebates.
GLP-1 discontinuation rates
Weight loss GLP-1s
Diabetes GLP-1s
Cell & gene therapy utilization is currently low, but may soon become more prevalent
Cell and gene therapies present a very different cost challenge. Individual treatments can exceed $2 million to $4 million, but utilization among employer populations remains extremely low.
Annual cell & gene therapy prevalence
GENE THERAPY
6.25 cases
per million lives
CELL THERAPY
15 cases
per million lives
High treatment costs have not translated into widespread employer cost pressure because utilization has been constrained by limited treatment capacity, strict clinical eligibility requirements, complex manufacturing and scheduling, and care delivery concentrated within specialized treatment centers. But those constraints are beginning to shift. Cell therapies are increasingly moving into outpatient settings, which can expand treatment capacity and make treatment accessible to more eligible patients. At the same time, the pipeline is expanding into autoimmune diseases, which are more prevalent among working-age populations and already represent significant specialty drug spend. This does not mean employers should expect cell and gene therapies to suddenly become a broad cost driver. It does mean that today’s low utilization may not remain as limited as access expands and new indications reach the market.
The market is responding to the uptick in these therapies with strategies such as mandatory Center of Excellence steerage and stop loss exclusions.
Cell & gene therapy: Preparing for the next phase of employer health plan risk
The key strategic question is no longer whether cell and gene therapies will affect employer health plans, but how employer exposure will evolve as utilization expands over the next few years. Managing these decisions requires aligning clinical, financial, and compliance considerations in a coordinated and specialized way.
Exploring more disruptive pharmacy strategies
Rising specialty drug costs, expanding demand for high-cost therapies, and continued pressure on health plan budgets are pushing many organizations to explore more disruptive or innovative pharmacy strategies. Options such as specialty carve-outs, utilization management carve-outs, biosimilar-first approaches, direct-to-consumer or direct-to-employer channels, patient assistance programs, and alternate funding arrangements may create opportunities to reduce spend, improve pricing transparency, and apply more targeted clinical oversight.
But these strategies are not one-size-fits-all solutions. Employers need to evaluate the full picture before moving forward, including savings potential, member disruption, operational complexity, vendor coordination, contract implications, compliance exposure, and the long-term sustainability of the model.
The right strategy depends on the employer’s population, current pharmacy spend, plan design, risk tolerance, and ability to manage change well.
