Press Release

U.S. employers step up efforts to manage the high cost of prescription drugs

Strategies encompass cost management for all drugs but focus particularly on specialty medications

November 3, 2016
| United States

ARLINGTON, VA, November 3, 2016 — With no end in sight to rising prescription drug prices, U.S. employers are stepping up efforts to manage costs while continuing to ensure employees have access to the drugs they need, according to the 21st annual Best Practices in Health Care Employer Survey by Willis Towers Watson (NASDAQ: WLTW). Employers are paying particular attention to high-cost specialty medications used to treat complex conditions such as cancer and hepatitis C. For example, the cost of new and highly effective prescription drugs or combinations of drugs for treating hepatitis C ranges from $65,000 to $120,000 for a three-month course of treatment.

“High price tags for specialty drugs are the main driver of employers more carefully examining their spending on pharmaceuticals and how they manage their employee pharmacy benefit programs,” said Nadina Rosier, North American Pharmacy practice leader for Willis Towers Watson. “But employers also are motivated because prescription drugs overall account for about 25% of the total cost of employer-sponsored medical benefits and an even larger percentage of growth in the cost of medical benefits. Failure to act now could cost employers hundreds of millions of dollars over the next few years and for the foreseeable future.”

Previously released survey results found that nearly nine in 10 employers have identified managing pharmacy spending as their top priority over the next three years. Common strategies employers are using today include:

  • Evaluating and renegotiating pharmacy contracts to obtain better pricing. Today, 63% of employers do this; another 31% are planning or considering this by 2018.
  • Ensuring appropriate utilization. Today, 61% of employers have added programs to ensure appropriate use of prescription drugs, up from 53% in 2015; 85% are considering doing so by 2018.
  • Restricting or excluding the use of certain drugs when equally effective, lower-cost alternatives are available. For example, 52% of employers exclude compound drugs; another 13% are considering this action by 2018.

With regard to specialty drugs, strategies growing in popularity include:

  • Evaluating specialty drug spend through the medical benefit instead of the pharmacy benefit. Today, 39% of employers have adopted this strategy, up from 26% in 2015; 82% will consider it by 2018.
  • Making changes to coverage to influence where and how specialty drugs are administered. Today, 19% of employers have made such changes; another 43% are considering them for 2018.
  • Establishing different copays for specialty drugs to promote the use of lower-cost alternatives such as biosimilars. Today, 18% of employers have done this, a number that could triple over the next two years.

“Companies tend to adopt simple solutions that result in a financial benefit first and move on to more complicated strategies later,” said Rosier. “Our survey shows that employers are rapidly becoming more aggressive, for example, by evaluating specialty pharmacy spend through the medical benefit to get more visibility into where these drugs are being administered. This is an essential component of managing specialty pharmacy spend, but it is just the beginning. Employers still need to take action based on what they learn.”

About the survey

The annual Willis Towers Watson Best Practices in Health Care Employer Survey was completed by 600 U.S. employers between June and July 2016 and reflects respondents’ 2016 health program decisions and strategies, and in some cases, their 2017 and 2018 plans. Respondents collectively employ 12.2 million full-time employees and operate in all major industry sectors.

About Willis Towers Watson

Willis Towers Watson (NASDAQ: WLTW) is a leading global advisory, broking and solutions company that helps clients around the world turn risk into a path for growth. With roots dating to 1828, Willis Towers Watson has 39,000 employees in more than 120 countries. We design and deliver solutions that manage risk, optimize benefits, cultivate talent and expand the power of capital to protect and strengthen institutions and individuals. Our unique perspective allows us to see the critical intersections between talent, assets and ideas — the dynamic formula that drives business performance. Together, we unlock potential. Learn more at