New Drug Approvals, Biosimilars, and the Growing Cost of Pharmacy Benefits: What Employers Need to Know Heading Into 2027

Pharmaceutical innovation is creating new opportunities for patients, but employers need to ask harder questions about how these medications are priced, managed, and paid for.

Every quarter, the pharmaceutical industry introduces new medications that promise better outcomes, additional treatment options, and in some cases, more convenient ways for patients to manage their health. From a clinical standpoint, many of these developments are encouraging. From the perspective of an employer funding a health plan, however, they introduce another layer of complexity into a pharmacy benefit that has already become one of the most difficult components of healthcare spending to manage.

The third quarter of 2026 was no exception. New treatments for high cholesterol, ADHD, and pancreatic cancer received FDA approval, while developments in COVID-19 prevention and continued biosimilar competition added to the growing list of issues employers should be discussing with their pharmacy benefit managers (PBMs), third-party administrators (TPAs), and advisors.

What concerns me isn't that new medications are entering the market. We should absolutely encourage pharmaceutical innovation, particularly when it improves outcomes or gives patients options they didn't previously have. My concern is that too many employers still pay for these medications through pharmacy arrangements they don't fully understand, with limited visibility into the economics behind their formulary decisions.

A new drug approval should lead to more than a formulary update. It should lead to a conversation about clinical value, total cost, member access, and whether the employer's pharmacy contract is working in its best interest.

Innovation Is Moving Faster Than Many Pharmacy Benefit Strategies Consider several medications receiving FDA approval in 2026.

Lipfendra (enlicitide) received approval in July as the first oral PCSK9 inhibitor for reducing LDL cholesterol in adults with hypercholesterolemia, including patients with heterozygous familial hypercholesterolemia. Until now, PCSK9 inhibitors have been administered by injection, including established medications such as Repatha and Praluent.

The introduction of an oral alternative is a significant development. Some patients who need additional cholesterol reduction may prefer a daily pill over an injectable medication, potentially improving treatment acceptance and adherence.

According to third-quarter pharmacy market reporting, Lipfendra entered the market with an annual wholesale acquisition cost of approximately $3,833, compared with reported annual list prices approaching $7,000 or more for certain injectable competitors.

That price difference certainly gets my attention, but it shouldn't be the end of the analysis.

An employer needs to understand the net cost after rebates, the medication's clinical appropriateness, and whether its PBM has financial incentives to prefer one product over another. A drug with a lower list price isn't necessarily the lower-cost option under every PBM contract, particularly when rebates and other manufacturer payments influence the economics.

Then there is Simtriyo (centanafadine), approved in July for ADHD in adults and children age six and older. It introduces a different treatment mechanism involving norepinephrine, dopamine, and serotonin reuptake inhibition.

For employers, the question isn't simply whether to cover another ADHD medication. It's how the medication compares with established treatment options, many of which have generic alternatives, and how the plan can preserve appropriate access without automatically moving patients toward higher-cost branded treatments when clinically appropriate lower-cost options exist.

Without direct comparative trials against established stimulants, plan sponsors should pay close attention to the clinical evidence supporting formulary placement and utilization management.

The most striking example may be Rasonque (daraxonrasib), approved in August for certain adults with metastatic pancreatic cancer. This is an important development for a disease that has historically offered limited treatment options, particularly in advanced stages.

The reported wholesale acquisition cost of about $39,800 per month also highlights the financial challenges facing employer-sponsored plans.

A single patient receiving a specialized oncology medication can generate hundreds of thousands of dollars in annual pharmaceutical expenses, depending on treatment duration and the broader course of care. In a smaller self-funded plan, that can materially change the claims experience and create significant stop-loss exposure.

I don't believe the solution is to make clinically necessary cancer treatment more difficult to obtain. Instead, employers need a coordinated specialty pharmacy, oncology navigation, case management, and stop-loss strategy that ensures employees receive appropriate care while the plan understands and manages the financial implications.

Earlier in 2026, the FDA also approved Xocova (ensitrelvir) for COVID-19 post-exposure prevention in eligible individuals age 12 and older. Unlike medications intended to treat an active infection, this product is used following exposure, within a narrow window. That creates a different utilization management challenge.

Prior authorization requirements that take several days to process can undermine the value of a medication that needs to be initiated quickly. Appropriate clinical safeguards remain important, but the process has to reflect the treatment itself.

This is something I believe employers should pay more attention to. Utilization management should support appropriate care, not become an administrative obstacle that prevents patients from receiving treatment when it is most effective.

Biosimilars May Be One of the Most Important Opportunities Employers Are Overlooking While new branded therapies receive much of the attention, I would argue that continued biosimilar competition deserves just as much discussion.

Recent biosimilar developments include alternatives to Neulasta, Lucentis, and NovoLog, along with the U.S. introduction of Omlyclo, an interchangeable biosimilar to Xolair.

These medications address very different clinical needs, including oncology support, retinal disease, diabetes, and allergic or inflammatory conditions. What they have in common is the potential to add competition to markets where biologic medications have historically carried substantial costs.

But employers need to understand an important distinction.

The availability of a lower-cost biosimilar does not automatically mean the health plan will realize the savings.

That depends on formulary decisions, contracting arrangements, reimbursement methodologies, rebate economics, provider purchasing incentives, and how the medication is administered and billed.

In some cases, a PBM may have a financial incentive to favor a higher-list-price reference product because of the rebates or other compensation associated with that product. In other cases, the lower-cost biosimilar may be preferred, but physicians and patients face barriers to switching.

Employers also need to distinguish between medications processed through the pharmacy benefit and those administered in a physician's office, infusion center, or hospital outpatient department under the medical benefit.

That distinction matters considerably.

An employer can negotiate an excellent specialty pharmacy contract and still have substantial avoidable spending on provider-administered medications if it doesn't evaluate medical-benefit drug reimbursement with the same level of attention.

I've said many times that employers need to stop looking at medical and pharmacy as completely separate purchasing decisions. They're both part of the same healthcare spend, and the economics should be evaluated together.

The Real Issue Isn't Just Drug Prices. It's What the Employer Actually Pays. One of my biggest frustrations with traditional pharmacy benefit arrangements is how hard it can be for an employer to determine the actual cost of a medication.

We spend an enormous amount of time talking about discounts off average wholesale price, rebates, specialty guarantees, and formulary management. Yet many employers still cannot answer a relatively straightforward question:

How much did the PBM actually make from the prescriptions filled under our plan?

Consider a medication with a $10,000 list price. Depending on the contract, the PBM may receive rebates, administrative fees, dispensing-related revenue, or other compensation tied to that medication. Some arrangements pass those amounts back to the plan. Others allow the PBM or its affiliates to retain portions of that revenue.

Significant differences can also exist between what the PBM pays the dispensing pharmacy and what it charges the employer.

None of these issues is new, but the introduction of additional high-cost medications makes them increasingly important.

For employers, this is why I emphasize transparent, pass-through PBM arrangements, well-defined contract terms, audit rights, and access to meaningful claims-level reporting.

A formulary that looks competitive on paper doesn't necessarily produce the best financial outcome for the plan.

I would much rather see an employer evaluate its actual net cost per medication, clinical appropriateness, utilization patterns, and total pharmacy spending than celebrate a large rebate guarantee without understanding how that rebate was generated.

A bigger rebate does not automatically mean a better pharmacy contract. In some cases, it can mean the opposite.

Specialty Drugs Are Becoming a Stop-Loss and Risk Management Issue For self-funded employers, specialty pharmacy strategy and stop-loss strategy can no longer operate independently.

An expensive new cancer therapy, a biologic for a chronic condition, or an emerging treatment for a rare disease can have a meaningful impact on individual large claimants and overall plan performance.

When I evaluate a self-funded plan, I'm interested in more than the specialty drug spending reported by the PBM. I want to understand which high-cost medications are being utilized, whether clinically appropriate alternatives exist, whether manufacturer assistance opportunities are available and compliant, and whether medications are being administered in the most appropriate setting.

I also want to know how these medications are treated under the employer's stop-loss contract.

Are specialty pharmacy claims eligible expenses? Are there reimbursement limitations? How are specialty carve-outs coordinated with the medical plan and stop-loss carrier? Could a change in the pharmacy program create an unexpected coverage gap?

Address these questions before a large claim occurs, not during a renewal when the employer discovers its highest-cost members are driving a substantial increase in stop-loss premiums.

We cannot eliminate the financial risk associated with serious medical conditions, nor should we allow cost considerations alone to determine whether someone receives medically necessary treatment. But employers can do a much better job understanding, financing, and managing that risk.

That is particularly important for smaller employers participating in level-funded arrangements or group captives, where just a handful of high-cost claims can materially affect financial results.

What I Would Be Asking My PBM Heading Into 2027 With employers already facing significant pressure on their 2027 healthcare budgets, I believe pharmacy strategy deserves a more detailed review than simply accepting the annual renewal or updated formulary.