Pharmacy costs continue to rise, putting increasing pressure on self-funded employers to rethink how they manage pharmacy benefits.

In a recent FierceHealthcare interview, Drexi's Executive Vice President and General Manager, Anthony Masotto, speaks with producer Chris Hayden about what is driving these cost increases and why many employers are struggling to keep up.

The Real Drivers Behind Rising Pharmacy Costs

According to Masotto, pharmacy costs are no longer driven by utilization alone. Structural factors are playing a much bigger role.

GLP-1 medications are a major contributor, but they are only part of the picture. There are more than 60 additional GLP-1 drugs currently in development, with significant growth expected over the next few years.

At the same time, specialty drugs and gene therapies are entering the market with very high price points, in some cases reaching hundreds of thousands or even millions per treatment.

Despite increased attention on regulation and transparency, overall costs continue to trend upward.

"All of this noise does not decrease costs. Claims are still getting bigger," Masotto explains.

He also notes that pharmacy spend has grown from roughly 5 percent of total healthcare spend to around 25 to 30 percent today, reflecting how quickly the landscape has shifted.

Why Traditional PBM Strategies Are Falling Short

Many employers try to manage costs by tightening formularies or limiting access to certain drugs, but this approach has its limits.

"Tightening formularies or cutting benefits misses the larger issue," Masotto says.

Rebate-driven models also fall short in addressing long-term affordability. In many cases, they delay savings rather than reducing actual costs.

Masotto points out that employers often find themselves repeating the same cycle. They switch PBMs expecting better outcomes, only to see costs increase again within a year.

Without a structural change, the results tend to stay the same.

A Shift Toward Upfront Cost Control

Masotto emphasizes the need to address costs earlier in the process, before they reach the plan.

This starts with access to better data and a clear understanding of where spending is coming from. It also requires strategies that focus on reducing gross cost, not just net cost after rebates.

Lower upfront costs can improve cash flow and reduce overall exposure, including how reinsurers assess risk.

Practical Strategies Employers Can Use

Masotto outlines several approaches that employers can consider:

• Using 340B programs to access more favorable pricing
• Exploring international sourcing through compliant channels
• Reducing reliance on rebate-driven pricing models
• Helping members make more cost-effective choices in real time

He also notes that lowering costs does not necessarily mean reducing benefits. With the right approach, employers can manage spend while still supporting a positive member experience.

The Trust Gap in the PBM Market

Masotto describes the current PBM environment as being in a "trust recession."

While transparency has improved, it has not fully addressed the underlying issues. In some cases, it has simply changed how pricing is presented.

Employers may have access to more data, but still lack clarity on actual costs and where value is being created.

This makes it difficult to evaluate options with confidence.

What Employers Should Be Asking

Masotto suggests two key questions employers and brokers should ask their PBM partners:

• How are your incentives aligned with reducing the plan's total cost, not just improving reporting transparency?
• What strategies are in place to manage high-cost claims before they occur?

Without clear answers, employers may continue facing the same challenges year after year.

Dive Deeper: The Complete GLP-1 Strategy

For a deeper look at GLP-1 trends and cost management strategies, download the full Drexi GLP-1 Whitepaper.

Watch the Full Interview

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Listen to the Full Interview

The full conversation between Anthony Masotto and Chris Hayden is also available on FierceHealthcare, including both a written summary and audio discussion.

Read and listen to the full interview on FierceHealthcare.

The Bottom Line

Pharmacy cost pressures are expected to continue as more high-cost therapies enter the market.

"There is a better way. But you have to change what you are doing today," Masotto says.

For employers, the question is not whether change is needed, but when to act. Delaying decisions may increase long-term exposure.

To Learn More

To explore how Drexi can support your organization in managing pharmacy costs, contact our team or visit the Drexi website.