Chronic musculoskeletal conditions like rheumatoid arthritis (RA), psoriatic arthritis (PsA) and ankylosing spondylitis (AS) are incredibly common and notoriously expensive to treat. On the medical benefit side, high-cost claims are often driven by surgeries, site-of-care variability for infused therapies and ongoing specialist care. These high costs are typically evaluated on the medical benefit side alone, showing an incomplete view of a condition’s total spend. Members are often seeking expensive treatment on both the medical and pharmacy side for one condition, which contributes substantially to a plan’s overall spend. Without evaluating both sides simultaneously, plan sponsors may miss key opportunities to better manage total cost of care.
Biologic therapies contribute to positive patient outcomes, but at a high cost
Biologic therapies have transformed the management of RA, PsA and AS both clinically and financially — helping improve patient outcomes but with a large price tag, currently averaging $12.28 total gross cost per member per month (PMPM) for our clients. These novel therapies provide targeted treatment and sometimes more convenient dosing options, helping to inhibit specific inflammatory pathways that drive flare-ups and disease progression. This allows for more precise management of autoimmune responses and improved quality of life.
As guidelines evolve to support earlier use of these therapies, utilization has grown, making them a major driver of pharmacy spend. Because of their cost, these medications are a focus of formulary and utilization management strategies, with tools like prior authorizations (PAs) and step therapies being vital in ensuring clinically appropriate and cost-effective utilization. Under CVS’ specialty guideline management (SGM) program, these products are subject to PAs to confirm appropriate diagnosis and ensure step therapy requirements are met. In contrast, Optum Rx and MedImpact have these utilization management levers built into the formulary.
While these strategies help to ensure clinical appropriateness, formulary strategy operates within a broader financial framework. In many cases, rebate dynamics play a central role in shaping the overall net cost and impacting where additional management levers can be applied. Within this context, one of the most significant considerations in managing costs for musculoskeletal conditions comes from rebate dynamics within classes that have similar clinical effectiveness. Knowing the high demand for these products, manufacturers may compete for preferred product placement — allowing plans to experience lower net cost through structured competition. As this competition evolves, biosimilars have emerged as a key inflection point, creating opportunities to achieve a lower net cost while maintaining clinically comparable efficacy and safety outcomes. The emergence of biosimilars has emphasized the importance of formulary placement and utilization management strategies. While biosimilars offer lower-cost alternatives to reference biologics, meaningful adoption typically occurs only after PBMs take a more decisive approach to exclude higher-cost reference products.
Potential savings associated with the medical benefit can be worth it, but may take some time
While pharmacy benefit strategies are highly effective for treating musculoskeletal disorders, they are only a portion of effective treatment. Most therapies used in these disease states, particularly those that are infused, are covered under the medical benefit. Oftentimes, these costs are less transparent, management tools are more limited and there is significant variability in spend driven by site of care.
While costly, clinical evidence repeatedly shows that when biologics are used for conditions like RA, PsA and AS, disease activity and progression are reduced. Health economics analyses, including those reviewed by the Institute of Clinical and Economic Review (ICER), suggest that these therapies provide meaningful clinical benefit through reductions in hospitalizations and surgical interventions, delayed progression to disability and improved workplace productivity through reduced absenteeism and presenteeism. While immensely effective, benefits of these therapies are usually seen later on, meaning savings aren’t always immediately visible in the claims data. However, the long-term health benefits and potential savings associated with these therapies should be considered when evaluating plan strategies.
Biosimilar price reduction and savings through Employers Health PBM vendors
Biosimilars across pharmacy and medical benefits
Biologics account for a disproportionate share of drug spend despite being used by a small percentage of members. For both benefits, biosimilars continue to represent one of the most immediate and impactful opportunities to manage increasing spend. This has already been demonstrated within the pharmacy benefit. As aforementioned, when PBMs exclude biologic reference products from their formularies in favor of biosimilars or implement a biosimilar-first approach, plans see high biosimilar utilization and tangible cost savings.
Humira, one of the highest cost and commonly utilized specialty medications on the market, has served as a prominent example of the financial impact biologics can have on pharmacy benefit spend. To put this into context, in 2023, the year before CVS excluded the Humira reference product from the formulary, our clients averaged $13.21 in total gross Humira spend across all indications. Notably, this level of spend slightly exceeds the total PMPM we observe across biologic utilization for these musculoskeletal conditions and speaks to the significance that biosimilars have on overall pharmacy benefit spend.
While biosimilars have impressive adoption across the pharmacy benefit and show potential savings across both benefits, it is significantly more difficult to see utilization from the medical side. Within the medical benefit, buy-and-bill models are utilized, where a provider purchases and administers the drug and is reimbursed based on average sales price plus a percentage add-on. Under buy-and-bill, providers may retain a margin based on drug reimbursement. This can reduce the incentive for providers to switch members to a lower-cost biosimilar, especially if there are modest price differentials.
Evolving treatments may help reduce spend
It wouldn’t be 2026 without mentioning GLP-1s at least once. As expected, GLP-1s are beginning to enter the conversation beyond obesity management. These products have already demonstrated efficacy beyond weight loss. Reducing cardiovascular events, improving sleep apnea and treating fatty liver disease. Early research indicates that these products may slowly enter the osteoarthritis space. While this remains an emerging area, it serves as a reminder of just how quickly the therapeutic landscape continues to evolve and how nearly every conversation in pharmacy benefits finds its way back to GLP-1s.
Bridging the gap to see real savings in spend
While plan sponsors may not directly control physician prescribing patterns, they do play a critical role in shaping the environment in which decisions are made. The opportunity then lies in evaluating the total spend across both benefits, assessing alignment of preferred products and if biosimilars are being used consistently, examining site-of-care variations and ensuring all vendors are operating with consistent incentives.
Biologic therapies will continue to play a major role in the management of musculoskeletal conditions and in driving specialty spend. For plan sponsors, pharmacy benefit strategies are already showing vast reductions in spend. The next opportunity is to continue to build on the foundation by aligning the management across both benefits. Through a more integrated approach, plan sponsors can take advantage of improving the visibility into the total cost of care, strengthening the impact of biosimilar strategies and delivering a more consistent experience for members.
The Employers Health clinical team remains committed to supporting employers and their members in understanding the nuances of these evolving offerings and welcomes the opportunity to address any additional questions at [email protected].
