Payers are pulling every lever available on specialty drug costs. Most of those levers are not connected to the place where spending decisions get made.
Specialty drugs now define the pharmacy cost conversation. They are actively distorting pharmacy budgets, breaking forecast assumptions, and exposing the limits of traditional cost controls.
A new report from the Pharmaceutical Strategies Group surveyed 228 benefits leaders across employers, health plans, and union coverage. The findings confirm what many plan sponsors already feel: the tools available are not keeping pace with the complexity of the problem.
For health plan leaders and the consultants who advise them, the data points to a structural gap that rebates, formulary tiers, and utilization management alone have not closed.
The Pipeline Is Not Slowing Down
Last year, 76% of novel drugs approved by the FDA were specialty drugs. Roughly half of the drugs currently in the pipeline are specialty products. That is not a spike. That is a structural shift in where pharmaceutical innovation is headed.
As these products arrive, they do not slot neatly into existing pharmacy benefit structures. Many are covered under the medical benefit, not the pharmacy benefit, which means they sit outside the formulary controls most payers have spent years refining. The complexity of managing specialty drugs across both benefits is now the top operational challenge payers report, ranked above access to integrated data and member affordability.
Payers Are Willing to Trade Rebates for Control
One of the more striking findings in the PSG report is the shift in how payers think about rebates. Two in five payers surveyed said they would accept less in rebates if they could implement additional utilization management. That is a meaningful concession for organizations that have long treated rebate revenue as a core offset against pharmacy trends.
The reason is not hard to find. Rebates are a lagging mechanism. They reduce the net cost of a drug after the prescribing decision has already been made. Utilization management acts earlier, at the point where a drug is authorized or substituted. For specialty products with six-figure annual costs, the difference between those two intervention points is significant.
The shift also reflects a broader skepticism about the current PBM model. The PSG report found that payers increasingly doubt whether PBMs that own specialty pharmacies are managing costs in the payer’s best interest. High service level expectations are not being met. The market is responding by looking for more direct levers.
The Medical Benefit Gap Is Where Savings Disappear
Almost all payers surveyed (93%) receive rebates under their pharmacy benefit. Just over half (51%) receive rebates for drugs covered under the medical benefit. That gap is especially pronounced for employers, who are far less likely to have rebate structures in place for medical benefit specialty drugs than health plans are.
This matters because the medical benefit is precisely where many of the highest-cost specialty drugs land. Infused biologics, oncology therapies, and certain high-cost rare disease treatments are administered in clinical settings and billed through the medical benefit. Formulary management stops at the pharmacy benefit edge for most organizations, and that is where control breaks down.
Cross-benefit formulary management is the emerging response. The PSG survey found that 50% of employers and 72% of insurers have plans in motion to address this. But having a plan and having a mechanism are different things.
The Lever That Is Still Missing
Every strategy discussed in the PSG report, rebate restructuring, utilization management, and cross-benefit formulary alignment, operates at the plan design level. None of them directly engages the physician.
That is a significant design flaw because when cost pressure shows up, members do not turn to plan design. They turn to physicians.
- 46.2% of consumers call their doctor for a lower-cost alternative
- Nearly 84% say they want their provider to automatically switch them to the lowest-cost option when appropriate
- Price confusion drives widespread reliance on discount cards and workarounds at the pharmacy counter
This behavior pattern has held steady for years. Consumers consistently push cost decisions back into clinical care because that is where they trust decisions to be made. Meanwhile, the system continues to push cost responsibility in the opposite direction, and that mismatch drives leakage.
What This Means for Consultants and Plan Leaders
If you are advising health plans or employer clients on specialty drug strategy, the PSG findings give you a useful frame. Payers know the problem is growing. They are willing to make trade-offs to gain more control. What they are struggling to find is a mechanism that operates where the prescribing decisions are made.
RazorMetrics engages the prescriber directly, inside their existing workflow, with specific patient-level information and clinically grounded alternatives. There is no new and no administrative burden layered onto an already pressured day. The recommendation arrives where the decision is being made, which is the only place it can actually change the outcome.
That is what a 75% physician response rate reflects. Not a clever outreach campaign, but a model that respects how physicians work and meets them there
The conversation has moved past whether to act on specialty costs. The question now is whether the solution being evaluated reaches all the way to the prescriber, or stops at the benefit design layer and hopes the savings follow.
See how RazorMetrics closes the gap between formulary strategy and prescribing behavior.
Reach out to learn how physician-directed engagement captures the specialty savings that plan design alone cannot.
