Rising drug prices have long been a major concern in the U.S., impacting individuals, employer healthcare plans, and federal contractor benefits. According to the Brookings Institute, 79% of Americans believe that prescription drug prices are unreasonable, and nearly 30% go without taking the medications prescribed to them because of their high costs.
It has become such a big concern that 70% of Americans say reducing drug costs is their greatest healthcare priority.
The Factors Behind Rising Drug Costs
Developing new drugs can be costly, with significant innovation and research going into these projects, along with multiple rounds of testing and adjustment. Many drug manufacturers claim they must charge high prices to obtain a return on their investment and pay for future research.
However, critics argue that pharmaceutical companies are also engaging in practices aimed at expanding their exclusivity in the market and limiting their competition. This is a common complaint surrounding the availability of generic versions of the drugs that make life-saving treatments available to people in need.
Another reason drug prices are higher in the U.S. than in other countries is the complicated system of multiple payers, which incentivizes drug makers to set their list prices high and offer discounts through various means.
Many observers have complained that this process is not transparent and does not result in savings for those who rely on these medications.
Weight Loss Drugs Are Driving Medication Expense Increases
For federal contractors who offer healthcare benefits to their employees, rising drug prices can significantly impact the bottom line. They must contend with increasing premiums and deductibles, which can affect their recruitment and retention strategies.
One particular challenge that has been growing in recent years is the rising use and misuse of weight loss drugs. In particular, glucagon-like peptide 1 agonists, or GLP-1s, used for treating type 2 diabetes, have been gaining popularity as weight loss tools.
Studies have indicated that many of the patients using weight loss drugs have not been diagnosed with obesity or other conditions for which these medications are intended, such as hypertension and diabetes. Instead, they often turn to these medications for vanity reasons and sometimes do so without proper medical supervision.
This is putting their health at risk because many of these weight loss drugs cause serious side effects such as liver damage, cardiovascular problems, and digestive issues. In addition, they can interact with other medications and can be habit-forming.
As a result, federal contractors may have to contend with higher claims and liabilities related to using these medications. For example, patients who take these drugs and experience adverse reactions or complications will need more healthcare services, and federal contractors may be required to cover these costs.
According to a survey by Accolade, the number of U.S. employers who cover obesity medications could double within the next year. Reuters reports that employers that cover weight loss medications must navigate climbing healthcare costs given the popularity of GLP-1 drugs such as Wegovy, Ozempic, and other semaglutides.
It has been estimated that one percentage point of a predicted 8.5% rise in employer healthcare costs will be attributable to employees taking weight loss medications.
A survey by the Business Group on Health revealed that 91% of employers are either concerned or very concerned about their overall pharmacy cost trends, and 85% said they were concerned or very concerned about their expenses related to GLP-1 weight loss and diabetes drugs.
How Federal Contractors Can Mitigate the Impact of Rising Drug Prices
There are a few ways that federal contractors can manage the impact of rising drug prices on their operations. Experts suggest that employers restrict rebate use and demand transparent prescription pricing.
They can also pay closer attention to their spending on drugs and establish baselines. Some federal contractors are using step therapy, which requires patients to see if less expensive medications work for them before trying the more expensive variations, while others are raising copayments.
In the case of weight loss drugs, providing education to employees about the risks and benefits of these medications and encouraging them to use them responsibly can be helpful.
In addition, offering federal contractor benefits that promote weight loss through safer means can go a long way toward reducing the use of weight loss drugs among federal contractor employees.
For example, providing wellness programs focused on lifestyle changes, offering employees gym memberships or access to weight loss apps, and hosting weight loss or exercise challenges among the employee base are all affordable ways that businesses can enhance the health of their workforce and steer employees away from expensive and potentially dangerous weight loss medications.
Learn More From the Experienced Federal Contractor Benefits Consultants
As drug prices continue to skyrocket, federal contractors need a well-informed and prudent strategy to keep their healthcare costs under control.
At Business Benefits Group (BBG), our detail-oriented benefits consultants possess extensive experience in federal contract regulations and benefits. Contact us today to learn more about our services.