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Rising Price of Specialty Drugs Impacts Benefits Costs for Employers

As an employer responsible for providing health benefits to your workforce, the rising cost of specialty drugs should be among your top concerns when it comes to controlling the cost of benefits. Total medical spending for a business consists of medical costs and pharmacy costs. The pharmacy cost portion used to represent about 18-22% of that total cost for employers. Today, that number is closer to 35-45%.

What accounts for this average 20% increase in pharmacy costs? A good portion is due to the sharp increase in the price of specialty drugs—a trend that is only expected to grow.

According to the Commonwealth Fund, “One of the country’s largest pharmacy benefits managers projects the price of specialty drug will increase between 21-24% annually over the next three years.”

Despite these startling statistics, employers don’t seem to be giving this issue the attention it deserves. From the Commonwealth Fund:

  • One in four employers have little or no understanding of specialty pharmacy prices and 53% have only a moderate understanding.
  • Some 30% of employers don’t know how much they spend on specialty drugs in total.

Whether they’re aware of the cost or not, employers spend millions of dollars on specialty drugs for their employees each year, and the cost is only going up.

In this blog post, we’ll take a deep dive into the rising cost of specialty drugs and their impact on medical spending for employers. We’ll also let you know what to look for when you’re evaluating your company’s prescription plan design.

What is a Specialty Drug?

According to the Pharmaceutical Care Management Association, the exact definition of a specialty drug is constantly evolving to account for pharmaceutical advancements, but in general terms, specialty drugs possess one or more of the following attributes:

  • Is prescribed for a person with a complex or chronic medical condition, defined as a physical, behavioral, or developmental condition that may have no known cure, is progressive, and/or is debilitating or fatal if left untreated or under-treated;
  • Treats rare or orphan disease indications;
  • Requires additional patient education, adherence, and support beyond traditional dispensing activities;
  • Is an oral, injectable, inhalable, or infusible drug product;
  • Has a high monthly cost;
  • Has unique storage or shipment requirements, such as refrigeration; and
  • Is not stocked at a majority of retail pharmacies.

Examples of High-Priced Specialty Drugs

The following is a cost breakdown for the top eight specialty medications. For all of these medications, the employee cost is traditionally a prescription copay of $10-$50.

Drug Name

Plan Cost


Annual Rx Cost











Rheumatoid arthritis
















Rheumatoid arthritis



Solutions for Business Owners

The first thing I would advise business owners to do is to start paying closer attention to how big of an impact the price of specialty drugs has on your total medical spending. Next, you may want to consider re-evaluating your plan model specifically around this category of prescription drugs.

Like all aspects of your health plan, it's important to have a thorough understanding of your employee base and their health needs so you can tailor your plan and wellness program to support their health needs and your bottom line.

I would also encourage business leaders to read up on healthcare consumerism—an industry solution intended to make using healthcare services more affordable by encouraging employer-sponsored benefits plan participants to become conscious consumers. This will ultimately improve patient outcomes and levels of satisfaction with the medical care they receive and reduce costs within the entire healthcare industry.

Related Reading: How Healthcare Consumerism Reduces Employer Benefits Costs


As a business leader, you know offering your employees comprehensive healthcare insurance, benefits, and wellness programs allows you to remain competitive in the market.

SWBC’s Employee Benefits Consulting Group is an experienced team of strategic leaders in the health insurance and benefits industry. We provide innovative solutions to your healthcare cost-drivers through our collaborative, consultative approach, allowing us to deliver customized plans to fit your company’s needs and budget.

Learn how to boost employee engagement while minimizing healthcare costs for your organization.

Xavier Guevara

Xavier Guevara is an Executive Account Manager with SWBC Employee Benefits Consulting Group. He has managed many fully insured and self-funded programs for large local and national accounts. Xavier is a performance-driven individual recognized as a field subject matter expert who has an established record as a skilled negotiator.

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