A few years ago, GLP-1s were a diabetes drug most benefits leaders barely thought about. Today they are reshaping pharmacy budgets across the country, and they will not be the last drug class to do it. Gene and cell therapy costs, already running into the millions of dollars per treatment, are reaching employer health plans, with dozens more therapies in the approval pipeline. For self-funded employers, this is not a one-time cost spike to absorb and move past. It is a structural shift in what “high-cost claim” means, and it is forcing decisions about plan design, cost-sharing and pharmacy strategy that many employers have not had to make before.
Pharmacy spend is growing faster than anything else on your plan
GLP-1s are the clearest example of how fast this shift has happened. Employers covering these drugs for weight loss are now seeing pharmacy trend increases exceeding 20 percent year over year, even with utilization controls in place, and research modeling from the Employee Benefit Research Institute found that GLP-1 coverage alone could raise employer-sponsored premiums by as much as 14 percent.
That impact is not evenly distributed. One widely cited example found a Minnesota school district where GLP-1s made up just 2 percent of prescriptions but 56 percent of total drug spending. A small share of a plan’s population can now drive the majority of its pharmacy budget, which is exactly why this requires a strategy rather than a reaction.
The next wave is already behind it
GLP-1s are a preview, not the whole story. Gene and cell therapies, one-time treatments that can functionally cure conditions like sickle cell disease, certain blood cancers and inherited disorders, are priced between roughly 2 million and 4 million dollars per treatment. More than 30 have already reached FDA approval, and industry estimates point to dozens more clearing the pipeline over the next several years.
A single employee’s treatment can now rival or exceed a small employer’s entire annual health plan spend. Stop-loss carriers have taken notice: several now offer dedicated gene therapy coverage layers separate from traditional stop-loss, specifically because standard reinsurance was not built to absorb this kind of severity. For self-funded employers, that is a signal worth paying attention to. If the reinsurance market is treating this as a distinct risk category, plan sponsors should be doing the same.
The Summary Plan Description problem no one saw coming
Here is where the pressure lands first: the Summary Plan Description (SPD). New high-cost drug categories are emerging faster than plan language can keep up, and many employers have responded by writing broad, catch-all exclusions rather than deliberate coverage decisions. The result is plan language that excludes a category by a name that may not match how the next therapy is classified, or blanket exclusions that create gaps, inconsistent claims decisions and confusion for employees trying to understand what is covered.
A reactive SPD update after a high-cost claim already happened is a much harder position than a deliberate one made ahead of it. Revisiting pharmacy and specialty drug language at each renewal, rather than only after a claim forces the issue, gives employers room to make an intentional decision instead of a defensive one.
The decisions self-funded employers control
This is also where self-funded status becomes an advantage rather than just added risk.
Employers with a self-funded health plan have direct control over the levers that matter most here: cost-sharing tiers for high-cost drug categories, eligibility criteria such as Body Mass Index (BMI) thresholds or documented comorbidities for weight-loss coverage and how stop-loss coverage is structured against gene therapy exposure specifically. Fully insured employers largely inherit these decisions from a carrier’s book of business. Self-funded employers get to build a pharmacy strategy around their own population and risk tolerance instead.
Eligibility criteria do more work than they look like on paper. Step therapy requires an employee to try a lower-cost option first, such as a generic or a different drug class, before the plan covers a GLP-1 or specialty drug. Prior authorization requires documented medical necessity before a claim is approved at all. Both slow down inappropriate utilization without an outright exclusion, which tends to land better with employees than a blanket denial.
Consider a hypothetical 400-employee employer redesigning its pharmacy benefit at renewal. Rather than excluding GLP-1s outright, it sets coverage at a BMI of 30 or higher with one documented comorbidity, requires six months of a lower-cost alternative under step therapy, and moves the drug class to a flat copay tier instead of standard specialty cost-sharing. On the gene therapy side, it adds a dedicated stop-loss rider rather than relying on its standard policy alone. None of these moves eliminates the cost. Together, they turn an open-ended exposure into a bounded, budgeted one.
None of these levers work in isolation. Cost-sharing decisions affect employee access and satisfaction, eligibility criteria carry compliance considerations and stop-loss structure determines how much volatility the plan absorbs. A genuinely self-funded pharmacy strategy treats these as one connected decision, not three separate ones.
Frequently asked questions
How much does gene therapy stop-loss coverage typically add to a stop-loss budget?
Pricing varies by carrier, but one widely quoted 2026 program runs a fixed $4.05 per employee per month, which keeps the added cost predictable even though the underlying exposure is not. Most employers evaluate this alongside their standard stop-loss renewal rather than as a separate purchase later.
What does going out to bid on a Pharmacy Benefit Manager involve?
It typically means requesting proposals from multiple pharmacy benefit managers (PBMs) to compare formulary structure, rebate arrangements and pricing transparency, rather than automatically renewing with an incumbent. Many employers use a consultant or third-party administrator (TPA) to manage this process and evaluate offers objectively.
Who should be involved in reviewing Summary Plan Description pharmacy language: brokers, legal counsel or the TPA?
Ideally all three, in the same review. Legal counsel confirms exclusion language holds up under ERISA, the TPA weighs in on how the wording plays out operationally during claims adjudication and a broker or consultant can flag how peer employers are handling the same drug categories. Treating SPD language as a single department’s task is where gaps tend to start.
What happens if an employer does nothing before this renewal cycle?
The decisions get made by default: broad exclusions stay in place, cost-sharing stays flat and stop-loss coverage may not reflect current gene therapy exposure. That default position is rarely the one an employer would choose deliberately.
How should employers communicate cost-sharing changes to employees?
Clearly, and ahead of open enrollment rather than after a denied claim. Framing changes around plan sustainability and continued access, rather than cost-cutting alone, tends to land better with employees.
Where a neutral third-party earns its keep
BHPS is not a pharmacy benefit manager, and that is intentional. As a third-party administrator, our approach to pharmacy benefit management for employers means working alongside whichever PBM fits a client’s population and goals, not pushing a single proprietary product. That means the guidance a self-funded employer gets on formulary strategy, utilization management and plan language is built around their plan, not shaped by which vendor stands to benefit from the recommendation.
That kind of independence matters most on exactly the decisions this article has covered: where to draw cost-sharing lines, how to word SPD exclusions so they hold up as new drug categories emerge and how to align stop-loss coverage with the specific high-cost exposure a plan faces. Getting ahead of these decisions, before a claim forces the issue, is the difference between a plan that absorbs this cost curve on purpose and one that reacts to it.
Talk with the BHPS team about building a self-funded pharmacy strategy for what is already on your plan and what is coming next.