Specialty drug use is outpacing rebate savings for self-funded employers heading into 2027 benefit renewals
A larger rebate guarantee from a pharmacy benefit manager (PBM) does not mean a self-funded employer's pharmacy costs are going down. As we head into 2027 benefit renewals, total pharmacy spend is becoming one of the most consequential lines in the benefits budget, and most PBM performance reports are not built to show it.
Employer drug costs are projected to rise 12 percent in 2026, outpacing overall healthcare cost trend, according to Business Group on Health's 2027 Employer Healthcare Strategy Survey of 127 employers, released in August 2026. The survey attributes the increase to growth in glucagon-like peptide-1 (GLP-1) drugs, expanding specialty drug indications and emerging cell and gene therapies. Pharmacy now accounts for about 25 percent of employers' total healthcare spending.
Why a bigger rebate can still mean a bigger bill
Consider a plan with 100 members on a high-cost therapy at $10,000 per person a year – $1 million in total spend. A negotiated 10 percent price reduction saves $100,000. If the number of members on that therapy grows to 140 over the same period, total spend rises to $1.26 million, a 26 percent increase despite the lower unit price.
“CFOs should focus on the total pharmacy spend, not the savings percentage printed in the contract,” said Paul Pruitt, chief growth officer and co-founder of SHARx, a high-cost prescription drug procurement platform.
Research published in the American Journal of Managed Care found that nearly two-thirds of employers with self-funded pharmacy benefits reported specialty drug rebate agreements that include a rebate guarantee. The researchers warned that such arrangements may obscure employers' view of actual net drug prices, potentially steering formularies toward higher-cost products and lifting total pharmacy costs. That lack of visibility carries legal risk: class actions built on employer Form 5500 data are already testing whether plan sponsors monitor how their benefits intermediaries are paid.
Specialty drug utilization is the variable most plans miss
Pharmaceutical Strategies Group's 2026 State of Specialty Spend and Trend Report found net specialty drug costs rose 12.5 percent in 2025, driven mainly by more members using specialty drugs and by new indications for existing ones. The share of members using at least one specialty drug climbed from 4.4 percent in 2023 to 5.5 percent.
PBM contracts typically report rebate guarantees, generic fill rates and prescription discounts. They do not typically show who is entering therapy, at what rate, or how utilization will shift over a plan year.
Employers are moving toward transparent PBM models
Pressure for transparency is building across benefits. A class action alleging broker commissions consumed 37 percent of Macy's supplemental benefit premiums was filed in New York federal court on October 3, 2026. In pharmacy, a National Alliance of Healthcare Purchaser Coalitions survey of 408 employers, published in August 2026, found the share using a PBM outside the traditional three – CVS Caremark, Optum Rx and Express Scripts – rose from 37 percent in 2025 to 46 percent. More than half of employers still with the big three are considering a switch.
Business Group on Health also found that 47 percent of employers are weighing a move for 2028 or 2029 to transparent or new-generation PBM models, which pass rebates directly to plan sponsors and disclose net drug costs.
Pruitt cautions against responding with blunt coverage restrictions, which he argues shift costs rather than resolve them, leading to employee complaints, absenteeism and eroded trust in the benefit. HR leaders weighing GLP-1 drug coverage decisions against catastrophic claim risk face the same trade-off. He favors combining clinical guidelines, utilization management, patient advocacy and adherence support.
His starting point for renewal season is the budget model itself. Pruitt recommends separate budget lines for GLP-1s, specialty medications, oncology therapies, autoimmune treatments and high-cost infusions, each tracked by new-to-therapy rates, continuation rates and pipeline therapies approaching coverage eligibility.
