Brokers play a key role in connecting employers with health care coverage options, including facilitating affordable prescription drug benefits for employers, which are a leading health care cost. In California, prescription drugs accounted for 11.2% ($60.36 per member per month) of the health plan premium in 2021, after manufacturer rebates. Health plan spending on prescription drugs in California has skyrocketed by $2.1 billion since 2017, including an almost $700 million increase in 2021 alone. With this trend projected to continue, employers and brokers are eager for a solution.

The current pricing models are largely closed networks of information, with brokers relying on imperfect information and incomplete data that limits their ability to advocate for employers. The model needs to change, but it can only happen if we empower brokers with information that better explains the true cost of drugs. Ultimately, transparency will benefit employers and their employees, while increasing value to the brokers' role in evaluating and recommending health care options for their clients.

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The three biggest concerns for brokers and employers today

Brokers and employers face three big challenges with drug pricing: lack of cost transparency, escalating prices, and an explosion of new drugs and expensive specialty therapies. Transparency is at the forefront of reform efforts, evidenced by the number of pharmacy benefit manager (PBM) hearings and the plethora of bills introduced by Congress this year.

About half of drug prices have been outpacing inflation in recent years. Specialty drugs and emerging therapies are exploding in both volume and price, contributing to the trend of prescription drugs making up a greater percentage of the total health insurance cost than before. Value-based pricing, where real-world evidence is used to determine effectiveness for each patient using the treatment, is not yet the nor,m despite years of interest. This leaves employers vulnerable to paying for drugs that may not be the best therapeutic option, combined with employees clamoring for drugs they hope will improve their health. Brokers are then left trying to explain to employers increasing costs associated with expensive, potentially transformative drugs. And how much employers are willing to absorb is unknown.

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What else should brokers be thinking about?

Brokers must show employers the value of their offering, presenting comprehensive information on pricing and effectiveness. They must also validate how they are improving employee access and outcomes, while maintaining sustainably affordable offerings. Employers look to brokers for help with information that supports the return on investment and year-over-year metrics that quantify value. But brokers can only provide their analysis based on the limited data they have.

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