Control the cost curve for chronic condition drugs
The cost of maintenance medications for chronic conditions such as diabetes, heart disease, and hypertension continues to rise, placing increasing financial strain on employer‑sponsored health plans.
Cardiovascular and antidiabetic drugs have experienced particularly sharp price increases of over 400% since 2002. For example, a cardiovascular drug that cost $100 in 2002 now costs about $455 in 2025, while antidiabetic drugs have risen to $442 over the same period.
Specialty medications, including oncology treatments, are also significant contributors to escalating costs. Although only a small segment of the population, about 2%, utilizes these therapies, they now account for more than 50% of total prescription spending.
Newer treatments, most notably GLP‑1 medications, are adding pressure, as well.
At the same time, overall prescription drug use in the U.S. is increasing, further compounding the situation. According to recent IQVIA data:
- Total prescription medicine use increased 1.7%, reaching 215 billion days of therapy in 2024
- The use of prescriptions in the U.S., based on defined daily doses, has grown 14% in the last five years—and is projected to grow.
In 2024, U.S. drug spending rose 11.4%, and GLP‑1 drugs alone accounted for 29% of that growth.
source: IQVIA
Proactive tactics to lower rising medication costs
Focus on employee wellness with prevention strategies
Preventing chronic disease is the best way to control long-term healthcare costs. The American Diabetes Association’s 2026 Standards of Care highlight the importance of personalized treatment plans and, when appropriate, glucose-lowering medications to reduce complications from conditions such as prediabetes and diabetes.
Cardiovascular health is another critical area. Heart disease remains the leading cause of death in the U.S., and the CDC reports that nearly half of adults have high blood pressure, a major risk factor for heart disease. These statistics underscore why early detection and proactive care matter.
Employers can play a key role in enhancing wellness by offering annual health screenings, blood pressure checks, tobacco cessation programs, nutrition coaching, and digital tools that help employees monitor their health between doctor visits.
Many employers are also expanding wellness efforts to support mental health and musculoskeletal wellbeing, which are major drivers of absenteeism, disability, and lost productivity across the U.S. workforce. When prevention strategies are easy to access and supported through benefits and workplace culture, employees are more likely to engage early and help avoid the progression to more costly conditions, treatments, and procedures down the road.
Balance affordability and need with cost controls
Employers can tighten oversight with tools like prior authorization and step therapy, along with other cost management strategies, such as:
- Negotiating smarter PBM contracts – Employers are pushing for fairer terms from Pharmacy Benefit Managers (PBMs), focusing on where drugs are placed on formularies, clarity around pricing and fees, and ensuring rebate passthroughs. New rules under the Consolidated Appropriations Act (CAA) require PBMs to disclose fees and how much they pay pharmacies, providing employers with better data to benchmark and discover issues like spread pricing. To take full advantage of these reforms, employers should conduct regular RFPs to compare PBM pricing and performance, as well as demand pass-through pricing models, which eliminate spread pricing and offer full visibility into drug costs.
- Using biosimilars, when appropriate – Biosimilars or lower-cost versions of biologics, are gaining traction, particularly in areas like immunology. Industry forecasts estimate biosimilar spending in the U.S. could reach $129 billion by 2027 and help slow overall biologic drug spending.
- Tailoring coverage for chronic condition medications – Coverage is increasingly being aligned with clinical guidelines, such as those issued by the ADA, emphasizing clear treatment criteria, adherence support, and more flexible step‑therapy protocols. This approach avoids broad exclusions that could undermine long‑term health outcomes and instead focuses on ensuring patients receive the right therapy at the right time. Although customized drug strategies, built around precise criteria and robust patient support, may increase per‑member pharmacy costs in the short term, they can help prevent higher downstream medical expenses, including avoidable hospitalizations, over time. In addition, robust wellness programming can play a complementary role by offering resources and activities that help members build healthier daily habits, better manage chronic conditions, and reduce the long‑term impact of disease progression.
Monitor regulatory environment
Here’s a snapshot of key regulatory issues employers should track, along with some actionable steps that can help compliance efforts.
| Regulatory focus area | What to know | What to do | Where to get details |
|---|---|---|---|
| Essential Health Benefits (EHBs) under ACA | EHBs include prescription drugs; no annual/lifetime dollar limits and cost-sharing caps apply | • Review plan documents to ensure Rx are treated as EHBs • Confirm cost-sharing aligns with ACA limits • Coordinate with PBMs/insurers to avoid improper tiering | HHS Notice of Benefit and Payment Parameters for 2026 |
| Value‑Based Insurance Design (VBID) | Medicare’s VBID model ended in 2025 due to cost concerns, but VBID concepts continue across commercial plans to improve access to high‑value chronic care | • Maintain or integrate VBID-style features (e.g., reduced copays for chronic disease drugs) • Monitor member outcomes and cost trends to adjust benefit design | CMS VBID FAQs |
| Drug Utilization Review (DUR) & ethical coverage | DUR programs should follow recognized standards, and not conflict with parity or EHB protections | • Require transparent, evidence-driven DUR processes from PBMs • Conduct parity checks on utilization controls in MH/SUD coverage | SAMHSA Employer Resources |
| Clinical trials/experimental drugs | Generally fall outside routine coverage unless specific plan provisions apply | • Define “experimental / investigational” drugs in plan documents • Outline ERISA-compliant claim and appeal procedures • Consider including trial cost provisions if offering enhanced coverage | CMS Clinical Trials |
| FDA approval and off‑label use | Coverage should primarily reflect FDA-approved indications For off-label uses, use medical necessity review | • Adopt a clear evidence hierarchy, e.g., FDA labels, professional compendia, peer-reviewed studies • Facilitate expedited reviews for urgent off-label cases | Code of Federal Regulations |
| MHPAEA (Parity) & CAA NQTL Analysis | Currently, 2024 parity rules aren’t being enforced, but the 2013 rule still applies | • Keep your NQTL analyses current and parity in place for prior authorizations and network design | DOL statement |
| ADA/EEOC | EEOC guidance clarifies that diabetes is covered under ADA and reasonable accommodations are required (e.g., testing schedules, insulin breaks, etc.) | • Educate HR and benefits teams about ADA accommodations for chronic conditions like diabetes • Review wellness program and coverage language to ensure non-discrimination | EEO; Diabetes in the Workplace and the ADA |
| ERISA fiduciary duty (PBM oversight) | Plan sponsors must prudently oversee pharmacy benefits and vendor fees. Litigation in 2024–2025 alleges PBMs breached fiduciary duties by excluding copay assistance from cost-sharing maxes, misleading plan designs, and inflating fees | • Audit PBMs for spending transparency (e.g., spread pricing, rebates, administrative fees) • Document fiduciary oversight process through RFPs, benchmarking, fee reviews • Ensure contracts allow access to full claims and rebate data | DOL Fiduciary Investigations Program |
| Transparency mandates | Plans must file machine-readable files (MRFs) including Rx data | • Verify annual submission of file formats and drug cost disclosures • Coordinate with TPA/PBM to ensure accurate, compliant files Track updates | DOL FAQs |
| HSA/FSA tax considerations | IRS allows coverage of a/B rated preventive drugs before the deductible applies if those drugs are recommended by the U.S. Preventive Services Task Force | • Align plan formularies to list preventive Rx eligible pre-deductible • Communicate to members about cost advantages to boost medication adherence | Code of Federal Regulations |
| State‑level regulations | States continue to regulate PBMs, spread‑pricing, and cost‑sharing | • Track EHB benchmark changes by state to adjust benefits • Monitor PBM laws (like spread-pricing bans) • Update PBM contracts and formularies | CMS; Information on EHB Benchmark Plans |
Reduce drug spending with innovative strategies
Today, managing chronic care drug costs means designing smarter benefits that improve access and outcomes. Employers who partner with knowledgeable benefits advisors and take proactive steps can balance affordability with quality care.
Key strategies include:
GLP‑1 coverage with guardrails
If your health plan includes GLP‑1 meds for weight management, consider adding sensible controls, such as prior authorization, clinical eligibility criteria, participation in lifestyle programs, and conservative refills until the member is tolerating these medications to reduce potential waste if side effects occur. All of these can help balance access to these drugs with long-term affordability and ensure coverage supports sustainable health outcomes.
Adherence and digital monitoring
Make it easier for employees to stay on track with their meds by combining practical steps like 90-day supplies, synchronized refills, and pharmacist outreach with remote monitoring tools for blood pressure or glucose. These strategies can help prevent complications, reduce emergency visits, and improve overall health.
Data‑driven vendor management
Use transparency tools like RxDC reporting and CAA requirements to review what you’re paying for drugs, rebates, and specialty markups. If the numbers don’t add up, renegotiate terms or explore carve-outs that can deliver savings without compromising care quality.
Biosimilar adoption
Employers can lower pharmacy costs by prioritizing biosimilars in high-cost areas like immunology and oncology, when clinically appropriate. These alternatives can deliver the same therapeutic benefits as brand biologics but at a fraction of the cost, helping plans manage specialty drug spend without compromising the quality of care for employees.
Value‑based pricing and design
Adjust cost-sharing so employees pay less for high-value medications (e.g., statins, blood pressure drugs, etc.) and more for low-value services to encourage adherence and better health outcomes without relying solely on price cuts.
“Biosimilars for drugs like Humira offer savings of greater than 80%.”
source: Biosimilars Council
Reimagine prescription drug benefits
At The Baldwin Group, we understand the pressure you face as an employer to manage prescription drug costs without compromising care for employees. Our experienced advisors know the challenges and our goal is to help you overcome them with tailored, innovative solutions that make chronic condition management effective and affordable for your workforce.
Let’s work together to help manage drug benefits for your health plan.
This document is intended for general information purposes only and should not be construed as advice or opinions on any specific facts or circumstances. The content of this document is made available on an “as is” basis, without warranty of any kind. The Baldwin Insurance Group Holdings, LLC (“The Baldwin Group”), its affiliates, and subsidiaries do not guarantee that this information is, or can be relied on for, compliance with any law or regulation, assurance against preventable losses, or freedom from legal liability. This publication is not intended to be legal, underwriting, or any other type of professional advice. The Baldwin Group does not guarantee any particular outcome and makes no commitment to update any information herein or remove any items that are no longer accurate or complete. Furthermore, The Baldwin Group does not assume any liability to any person or organization for loss or damage caused by or resulting from any reliance placed on that content. Persons requiring advice should always consult an independent adviser.
