When renewal numbers start rising, your pharmacy benefit may be one of the first places to look
Table of Contents
- Before you accept another renewal increase, look at pharmacy first
- How pharmacy costs affect self-funded and level-funded employers
- What employers often miss when reviewing pharmacy spend
- The difference between pharmacy claims and pharmacy strategy
- Why employee prescription costs can become a plan problem
- How specialty medications can change the renewal conversation
- What your PBM reports should actually show you
- Questions employers should ask before accepting renewal numbers
- Where pharmacy savings opportunities often hide
- How Intercept Rx helps employers take control of pharmacy spend
- Key takeaways
Before you accept another renewal increase, look at pharmacy first
Employers are reviewing health plan costs more closely this year, and pharmacy is quickly becoming part of that conversation.
Total health benefit cost per employee is expected to rise 6.7% on average in 2026, even after employers make planned cost-reduction changes, and closer to 9% without them.
Numbers like that get leadership asking why the plan is getting more expensive, what changed, and what can actually be controlled.
Pharmacy benefits belong in that conversation. Prescription claims, specialty medications, employee copays, rebate arrangements, PBM contract terms, and member support all shape the cost story behind a health plan. For self-funded and level-funded employers, those details carry more weight because plan performance is tied directly to claims activity.
Pharmacy spend is also easy to overlook until renewal numbers arrive. The increase shows up first, and only then does anyone start looking backward to explain it. By that point, HR, finance, leadership, and the broker are often scrambling to understand the same problem at the same time.
A closer pharmacy review earlier in the year gives employers real answers before that scramble starts: which medications are driving spend, how much employees are paying, whether specialty claims are being watched, and where savings might be hiding.
How pharmacy costs affect self-funded and level-funded employers
Self-funded and level-funded employers usually feel pharmacy cost increases more directly than fully insured employers do. A fully insured employer mostly sees the increase through the premium. A self-funded or level-funded employer sees it in claims, renewal projections, stop-loss discussions, and budget planning, which gives them more reason to understand what's happening underneath the number.
Average employer-sponsored health benefit costs rose 6% in 2025 and are projected to rise another 6.7% in 2026, putting per-employee costs above $18,500.
Specialty medications, high-cost brand drugs, and weak pharmacy contract terms can all push that number higher when they aren't reviewed closely. Even a handful of high-cost claims can shift the entire renewal conversation.
Pharmacy costs also land on employees directly, through a higher-than-expected price at the counter, an unexpected prior authorization, a prescription delayed because the copay felt too high. Those moments turn into HR and broker questions fast (more on this in Section 5).
Brokers are usually the ones asked to explain what's driving costs and what can be controlled. A closer pharmacy review gives them a specific, data-backed place to start instead of a general renewal conversation.
What employers often miss when reviewing pharmacy spend
Many employers look at total pharmacy spend and stop there. It's a useful starting point, but it doesn't answer the questions that actually drive plan decisions.
A total spend number shows what happened. A deeper review shows why, and where the missed savings, high-cost medications, and employee cost issues are hiding.
Start with which medications are driving cost. A plan might have one or two drugs creating an outsized share of spend, a pattern of high-cost brand medications worth reviewing for alternatives, or specialty claims that need closer attention.
Employee costs need the same scrutiny. If employees are paying too much at the counter, the plan is creating frustration even as the employer spends more on benefits. That's a hard spot for HR, since the company is paying more while employees still feel like the benefit isn't helping.
Rebates deserve attention too. Employers should know whether rebates are passed through clearly and how those dollars affect the plan; unclear reporting makes it hard to know if the pharmacy benefit is actually performing.
Specialty medications and member support round out the picture. Both are covered in more detail later in this article.
The difference between pharmacy claims and pharmacy strategy
Claims data is only useful when someone knows what to do with it. A spreadsheet shows what the plan paid, a report lists the top medications, a claims summary shows utilization. But those pieces only matter if the employer and broker can turn them into action.
That's the difference between claims and strategy. Claims show the cost. Strategy explains what to review, what to change, and what to monitor throughout the year, not just at renewal.
A strong pharmacy benefit partner helps employers separate expected utilization, where employees need medications, families need access to care, and chronic conditions need treatment, from avoidable overspending.
The review should focus on where the plan may be paying more than necessary, where members are hitting unnecessary friction, or where the employer simply lacks visibility.
With the right data, brokers can walk into renewal meetings with specific talking points about which medications are driving spend, where member costs are showing up, and which specialty claims need attention, instead of defending the top-line number.
Why employee prescription costs can become a plan problem
Employees judge a health plan by what happens when they actually use it — and that mostly comes down to the pharmacy counter. They may not know the details of the PBM contract or the rebate arrangement, but they know exactly what they're asked to pay.
When employees can't afford their medications, it shows up as HR complaints, lower medication adherence, delayed treatment, and negative feedback at open enrollment, turning a cost issue into a plan problem. A high prescription cost can make an entire benefits package feel weaker, even when the employer is spending more overall.
Confusing pharmacy rules add to the load. A prior authorization nobody explained, a medication that's suddenly not covered, a copay that changed without warning all lead to questions that land on HR's desk first, even though HR usually doesn't have the pharmacy data or clinical background to resolve them.
That's why member experience belongs in the pharmacy conversation alongside cost. When employees have help understanding their options and accessing medications at a lower cost, both the benefit and HR's workload get easier.
For self-funded and level-funded employers, pharmacy needs to support the budget and the people using it at the same time. Cost control and member support aren't separate conversations.
How specialty medications can change the renewal conversation
Specialty medications can shift a renewal conversation fast, because a single high-cost claim is impossible to ignore. These medications are often clinically necessary and life-changing for the members who need them. They're also expensive enough that they deserve their own line of review.
A plan can look stable for months and then one specialty claim moves the numbers. If pharmacy spend only gets reviewed once a year, that claim may not get attention until the renewal conversation is already underway.
Employers should know which specialty drugs are driving spend and whether lower-cost sourcing options exist, without limiting a member's access to needed treatment. Ideally, specialty claims are monitored throughout the year, not discovered at renewal.
Member experience matters here too: specialty medications often come with extra steps like paperwork, delivery coordination, or prior approvals. When that process is confusing, the employee gets stuck and HR gets pulled in. A good pharmacy review looks at both sides: what the plan is paying and what the member is experiencing.
What your PBM reports should actually show you
A PBM report should help an employer make decisions, not just log numbers. A useful report shows total pharmacy spend, top cost-driving medications, specialty drug spend, member cost trends, utilization patterns, rebate information, program participation, and member support issues, measured against the prior period.
The best reports connect those numbers to real decisions: which medications drove the increase, whether employees are paying more out of pocket, whether specialty claims changed the picture, and whether rebates are clearly explained.
That same report should hold up in the renewal conversation, giving HR, finance, leadership, and the broker a shared, confident view of what happened inside the pharmacy benefit, instead of a list of numbers everyone has to interpret on their own.
Questions employers should ask before accepting renewal numbers
Before accepting renewal numbers, employers should ask sharper pharmacy questions, the kind that help HR, finance, leadership, and brokers understand whether pharmacy benefits are actually being reviewed closely enough.
- Which prescriptions are driving the highest spend?
- How much are employees paying out of pocket?
- Are specialty medications being reviewed for savings opportunities?
- Are rebates clearly explained?
- Are there hidden fees inside the pharmacy arrangement?
- What happens when an employee can't afford a medication?
- Does the PBM provide member advocacy?
- Can the current pharmacy partner show where savings were created?
- Are there medications that could be sourced at a lower cost?
- Is the broker getting enough pharmacy data to explain the renewal?
- Can pharmacy savings be reviewed before the next renewal conversation?
These questions give employers and brokers a concrete starting point grounded in specific cost drivers and employee pain points, not just the top-line renewal number.
Where pharmacy savings opportunities often hide
Savings opportunities usually show up when employers look past total spend and into the details behind it, including high-cost brand medications, specialty drugs, unclear rebate arrangements, poorly managed formularies, and missed lower-cost sourcing options.
Employee cost-sharing belongs in that review too. If employees are paying more than they should, or struggling to navigate expensive prescriptions, HR feels that pressure even while the plan keeps spending more.
Better pharmacy oversight gives employers and brokers a clear view of what the plan paid, what members experienced, and where savings may exist before the next renewal.
How Intercept Rx helps employers take control of pharmacy spend
Intercept Rx works with self-funded and level-funded employers who want a closer look at pharmacy spend, employee costs, and savings opportunities.
The Rx Optimization Program is built to help reduce pharmacy spend while improving the member experience. It gives employers a clearer view of prescription costs and surfaces opportunities that a traditional pharmacy arrangement might miss.
For eligible members, the program can provide $0 copays and free home delivery, making a real difference for employees used to sticker shock at the pharmacy counter. Intercept Rx also provides dedicated member advocacy, so employees get help with prescription access, cost questions, or confusing pharmacy situations, which means fewer of those issues land on HR's desk.
Employers can request a savings analysis to see what's possible inside their own plan, based on their actual claims, medications, and member needs, not a generic estimate. The program can also work alongside an existing PBM, so self-funded and level-funded employers get a practical way to review pharmacy benefits without rebuilding the entire plan at once.
Before accepting another renewal increase as the cost of doing business, take a closer look at what your pharmacy benefit is actually doing for your plan, your employees, and your budget.
Key Takeaways
- Pharmacy benefits can affect renewal pressure, employee costs, specialty drug spend, and plan performance.
- Self-funded and level-funded employers should review pharmacy claims before renewal numbers arrive.
- Total pharmacy spend only shows part of the story.
- Specialty medications and high-cost brand drugs deserve closer review.
- Clear PBM reporting helps brokers explain what is driving costs.
- Member advocacy can reduce employee frustration and support HR teams.
- Intercept Rx helps employers review pharmacy spend, identify savings opportunities, and support members.
