Employer healthcare budgets are heading toward another difficult year. A recent Marsh survey projects that health benefit costs per employee will rise 8.2% in 2027, the largest increase since 2003, even after employers make planned cost-reduction changes. Without those measures, employers expect costs to increase by 11%. For CFOs and CHROs, an increase of that size does not stay contained within the benefits budget. It can affect compensation, hiring, and how much money remains available for other workforce priorities.
Many factors are pushing healthcare costs higher, but pharmacy spend deserves scrutiny because it is consuming a growing share of employers’ healthcare dollars. A 2026 employer benefits report found that pharmacy now accounts for 29.5% of total employer healthcare spend, up from 27.2% in 2024. A 2.3 percent increase in one year should prompt employers to ask what is driving that growth and whether their current pharmacy strategy is doing enough to control it.
GLP-1 medications illustrate how concentrated that spending has become. Just 6% of members in the analysis used GLP-1s in 2025, yet the medications accounted for 20.3% of prescription spending. That pressure could continue as utilization grows and GLP-1 therapies reach broader patient populations, including through indications involving cardiovascular disease, obstructive sleep apnea, chronic kidney disease, and metabolic dysfunction-associated steatohepatitis (MASH). For employers, the question becomes how to manage growing demand without allowing one increasingly important drug category to dictate the affordability of the broader benefit.
Faced with numbers like these, employers are under pressure to raise deductibles, increase employee contributions, restrict drug coverage, or make other benefit reductions. Those measures may provide immediate budget relief, but before asking employees to absorb more of the cost, employers should understand what they are paying for, where the pharmacy dollars are going and whether they have exhausted opportunities to reduce the underlying cost of the benefit.
Healthcare Costs Are Becoming a Workforce Problem
The pressure extends well beyond the benefits budget. In an August survey of 408 employers, the National Alliance of Healthcare Purchaser Coalitions found that 83% said healthcare cost increases compete with wage and salary increases, while 92% said costs hurt their competitiveness. For many employers, every additional dollar spent on benefits is a dollar that cannot be invested elsewhere in the workforce, whether through compensation, hiring, or other priorities.
At the same time, 98% said health and well-being benefits are important for attracting and retaining employees. That leaves employers balancing two priorities that are increasingly difficult to reconcile: controlling a rapidly growing expense while preserving a benefit they consider important to their workforce strategy.
Cost sharing can help an employer manage its immediate exposure, but it can also transfer more of the affordability problem to employees. Higher deductibles, premiums, or prescription costs can change how workers experience a benefit and whether they can afford to use it.
GLP-1s make that tension particularly visible. Rising utilization of the medications for weight management is expected to account for a full percentage point of overall employer health-cost growth in 2027. Some employers seeking immediate savings have already chosen to drop weight-loss coverage.
The underlying challenge is broader than one drug category. Specialty medications can account for a disproportionate share of an employer’s pharmacy spending, meaning a relatively small number of high-cost prescriptions can have an outsized effect on the overall budget. When spending is this concentrated, employers should understand which medications are driving the budget before making broader changes that affect the entire workforce.
Before Cutting Benefits, Employers Should Examine How Pharmacy Dollars Are Spent
HR leaders cannot solve this problem alone. The growing impact of pharmacy spending on workforce planning, compensation, and company finances makes collaboration among HR, finance, and benefits teams essential.
Before reducing coverage or increasing employee costs, leadership teams should consider several areas:
- Understand the PBM economics. Employers should know how their pharmacy benefit manager (PBM) is compensated, how money flows across the supply chain, and where rebates, specialty drug pricing, or other revenue streams may allow the PBM to benefit as drug costs rise. The key question is whether those financial incentives align with the employer’s goal of lowering total pharmacy costs.
- Examine the claims data. Employers with full access to medical and pharmacy claims data tend to use more high-value purchasing strategies. Better visibility can help identify which medications and populations are driving spend and where alternative approaches deserve consideration.
- Compare drug-access pathways. The goal is not to replace traditional pharmacy benefits, but to determine if certain medications have additional clinically appropriate access options. Depending on the drug and patient, employers may be able to evaluate manufacturer programs, alternative sourcing models, direct purchasing options, or other pathways. Any alternative should be assessed for clinical appropriateness, regulatory compliance, affordability, and continuity of care.
- Measure total value rather than one contract number. Rebates, discounts, and guarantees can be useful metrics, but they do not tell employers whether the organization is paying the lowest appropriate net cost or whether employees can actually access their medications. Pharmacy strategies should consider cost, access, outcomes, and employee experience together.
This level of evaluation also requires clearer ownership. Finance understands the effect of healthcare inflation on budgets and compensation. HR understands the workforce’s consequences of benefit changes. Benefits teams understand plan design and vendor performance. Decisions involving a cost category this large require all three perspectives.
The 2027 Benefits Decision Is Bigger Than Cost Sharing
Employers have legitimate reasons to be concerned about rising healthcare costs. Few organizations can absorb increases approaching double digits indefinitely, particularly when those costs compete with wages, hiring, and other investments.
But higher employee contributions and narrower coverage address who pays the bill. Employers also need to understand why the bill is growing and whether the way medications are purchased is producing the best available value.
That question becomes more important as high-cost and specialty medications occupy a larger share of pharmacy spending. Employers that understand their claims, PBM economics, sourcing options, and employee access are better equipped to decide whether cuts are necessary.
As employers finalize their 2027 benefit strategies, difficult decisions may be unavoidable. The goal should be to make those choices only after they understand which costs they can control, which purchasing assumptions deserve reconsideration, and how each decision will affect the people the benefit was designed to serve.
