Pharmacy now accounts for a quarter of employer healthcare spending. The employers who are most concerned about it are doing something about it.
Pharmacy costs are projected to rise 12 percent this year before plan changes and 10 percent after them, according to Business Group on Health's 2027 Employer Healthcare Strategy Survey. For 2027, the pre-change projection holds at 12 percent but falls to 11 percent with interventions in place. Those figures tell benefits brokers something important: the actions employers are already taking are working, but not fast enough to close the gap.
The report gathered responses from 127 large employers representing 11 million covered lives. Ninety-five percent of employers surveyed said they are concerned or very concerned about pharmacy costs. The cost drivers are a combination of rapid GLP-1 utilization growth, high-cost specialty drugs, broader treatment indications, and emerging cell and gene therapies. The dollar amounts attached to each are now forcing decisions that employers have been deferring.
The sharpest signal in the pharmacy data is the pullback on glucagon-like peptide-1 (GLP-1) weight management coverage. The share of employers covering GLP-1 drugs for obesity fell from 72 percent in 2025 to 60 percent in 2026. Employers still covering them for this purpose are adopting tighter utilization management to cut inappropriate prescribing.
The trend aligns with wider market data. Prescription drug spending among large employers rose 9.4 percent in 2025. That was the largest year-over-year increase in a decade based on Mercer's 2025 National Survey of Employer-Sponsored Health Plans.
GLP-1s were a primary driver. At companies with 5,000 or more workers, 43 percent covered GLP-1s for weight loss in 2025. Of those employers, 59 percent reported that employee uptake exceeded their budget projections, according to a 2025 KFF survey.
The cost pressure that followed is producing the coverage retrenchment Business Group on Health now documents. Data from major employers cutting GLP-1 and other benefits ahead of 2027 shows the trend is moving across company sizes and sectors, with names including Starbucks and Deloitte already removing or restricting weight loss drug coverage.
Some employers are rerouting rather than eliminating coverage. Sixteen percent of those surveyed said they would direct employees to direct-to-consumer channels for GLP-1 medications. Another 17 percent plan to use direct-to-employer arrangements that bypass the pharmacy benefit manager (PBM) for these drugs.
For benefits advisers, this is a live advisory issue now: brokers advising clients on renewal strategy need to review GLP-1 policy well ahead of the next cycle.
Beyond GLP-1s, employers are tightening formulary design to redirect spending toward lower-cost biosimilars where clinically appropriate. Biosimilars are biological medicines that are highly similar to approved reference drugs and carry list prices well below the branded originals. Clinical edits and coverage policy adjustments to push biosimilar uptake are now standard in employer pharmacy strategy, according to Business Group on Health.
The PBM accountability question is moving from background concern to active plan change. Thirty-two percent of employers will offer transparent or next-generation PBM plans in 2027, the report found. Another 47 percent are considering the switch for 2028 or 2029. Traditional PBMs have faced sustained criticism from employer groups for opaque rebate arrangements and spread-pricing practices that obscure the true cost of drug benefits.
Legislative pressure has followed. A coalition of employer groups - including the Purchaser Business Group on Health and the ERISA Industry Committee - praised pharmacy benefit manager transparency and accountability provisions in the Consolidated Appropriations Act of 2026, calling them a step toward reducing prescription costs for working families.
Brokers guiding employers through PBM evaluation should note that the regulatory backdrop has shifted since most legacy contracts were signed. The benefits broker hiring patterns now reshaping the employer health advisory market reflect how seriously employers and brokerages are taking the pharmacy cost problem.
For cell and gene therapies, Business Group on Health found employers are working through centers of excellence (COEs), specialized contracting, and risk-sharing arrangements to manage coverage decisions and cost exposure. These therapies can carry price tags of hundreds of thousands of dollars per patient. The volume of affected patients is smaller than with GLP-1s, but a single claim can materially shift a mid-size employer's annual pharmacy spend. Risk-sharing mechanisms and outcome-based contracts are the tools employers are reaching for. Brokers who can evaluate these arrangements will be better positioned to advise self-funded clients.
Data from the report points to three areas where the market is moving fastest: GLP-1 coverage decisions and the alternative access models now available alongside them; biosimilar adoption as a formulary design tool; and PBM contract transparency. Employers who have not reviewed their PBM arrangement in the past 12 months are working off terms that predate both the GLP-1 cost surge and the legislative changes now reshaping how pharmacy benefits are structured.
