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Pharmacy Plan Design

Why Do Employers Care?

Prescription drugs are integral to high quality health care; they help prevent and treat acute and chronic conditions and can help patients avoid costly medical problems and unnecessary treatments. In the U.S., spending for prescription drugs currently accounts for $374 billion (Figure 1).1 However, the Centers for Medicare and Medicaid Services (CMS) predicts a continued annual spending increase of 6% or more from now until 2022.2 Alarmingly, up to 50% of prescribed medication is not taken as directed, contributing to excess waste and spending as well as to increased patient morbidity and mortality.3,4

Figure 1.

Specialty drug spending, in particular, is of major concern for employers, with prices and utilization escalating at an unprecedented rate.

What Can Employers Do?

The pharmacy benefit is a major focus for employers given the high utilization of pharmaceuticals and their rising cost. Employers have implemented a number of techniques to manage spend through techniques including prior authorization, step therapy and utilization management. The National Committee on Pharmacy Benefits and Specialty Medicine focuses on ways employers can optimize their pharmacy benefits, as well as strategies for specialty medication management.

References (show references)

1 Berkrot, B (2015, April 14). U.S. prescription drug spending rose 13 percent in 2014: IMS report. Reuters. Retrieved from

2 AHIP (July 2015). Issue brief: Specialty drugs – Issues and challenges. Retrieved from

3 Cutler DM, Everett W (2010). Thinking outside the pillbox – Medication adherence as a priority for health care reform. New England Journal of Medicine, 362: 1553-1555. Retrieved from

4 Brown MT & Bussell JK (2011). Medication adherence: WHO cares? Mayo Clinic Proc, 84(4):304-314. Retrieved from

Page last updated: February 29, 2016

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