Why Did Our Pharmacy Spending Increase When Enrollment Barely Changed?

The short answer

Total pharmacy spending is members times cost per member. If enrollment holds steady, all of the growth comes from cost per member: higher prices, more prescriptions, more expensive drugs, or a few members starting costly treatments. In a small group, those few members can drive most of the increase.

It's also not just your plan. Drug costs are rising faster than other health costs. Milliman projects pharmacy costs for the average person in a typical employer plan, counting both what the employer and the member pay, will rise 14.8% in 2026, net of rebates, against 7.9% for total health costs (Milliman Medical Index, May 2026). Segal's survey of insurers, PBMs and administrators projects prescription drug costs will rise 11.5% in 2027, against a median 9.9% for medical (Segal, July 2026).

The math on one group

This is a hypothetical group with 200 members in both years, so 2,400 member months each year. Amounts are what the plan paid after member cost sharing and before rebates, which is how many pharmacy claims reports show them.

Spending rose $54,000, or 22.5%, with the same 200 members. New treatments for four of them, 2% of the group, account for $42,000 of the increase. That's 78%.

Every number in this example is illustrative, not a specific drug or plan. Real GLP-1 and specialty costs vary widely, and rebates, if your plan receives them, would lower the net amounts.

Seven things that can raise cost per member

1. Prices went up

Drugmakers usually raise brand list prices in January. In January 2026, 46brooklyn counted 951 brand list price increases, with a median increase of 4%, along with 20 decreases (46brooklyn, February 2026). List prices are before rebates, so list-price inflation and your plan's net pharmacy spending can tell different stories, but list prices are usually what a claims report starts from. New drugs also tend to launch at high prices.

2. Members started GLP-1s

GLP-1 drugs such as those used for diabetes and weight loss have become one of the biggest drivers of drug spending. Segal points to expanding indications for GLP-1 anti-obesity medications as a driver of its projected 11.5%. Among employers with 200 or more workers that offer health benefits, 18% cover GLP-1s primarily for weight loss. Of the employers that cover them for weight loss, 29% say the coverage had a significant impact on their prescription drug spending, rising to 61% among those with 5,000 or more workers (KFF, October 2026). Even plans that don't cover them for weight loss often cover some GLP-1s for diabetes.

3. Someone started a specialty drug

Specialty drugs, high-cost treatments for complex conditions, are about 55% of pharmacy benefit spend in UnitedHealthcare's employer-plan data (UnitedHealthcare 2026 Health Trends Report). In PSG's 2025 data, specialty trend was 10.8% before rebates, and more use accounted for 10.6 percentage points of it. Higher cost per claim added only 0.1 points. The share of members using a specialty drug rose to 5.5% (PSG, July 2026). So rising spending isn't necessarily a sign of rising drug prices. In a small group, one new specialty patient can move cost per member more than everything else combined. See Specialty Drugs.

4. Rebates fell, or arrived at a different time

If your plan receives rebates, a smaller rebate raises your net cost even when the claims report doesn't change. In PSG's 2025 specialty data, trend was higher after rebates (12.5%) than before them (10.8%), which means rebates offset a smaller share of the increase. Timing matters too: when PBMs share rebates with employers, they typically pay them 90 to 180 days after claims are paid (Milliman Medical Index 2026, p. 5), so a payment that lands in a different plan year can make one year look better and the next look worse. See PBM.

5. The formulary or plan design changed

A new PBM contract, a formulary update or a benefit change can move costs. If a drug your members use moved to a preferred tier, or you lowered a copay, the plan pays more of each prescription. Sometimes the drug costs the same overall, but a benefit change shifts more of the bill from the member to the plan. If a cheaper alternative was excluded or a generic came off the list, members may have switched to a costlier drug. See Formulary.

6. The same headcount, different members

Flat enrollment doesn't mean the same people. If members with few prescriptions left and members with chronic conditions joined, cost per member rises with no change in headcount. An aging population can also increase expected use. And count members, not employees: the same number of employees with more covered dependents is real growth.

7. The report is comparing unlike periods

Make sure both years cover the same months, with rebates treated the same way. A report that nets rebates in one year but not the other isn't comparing like with like. Also check whether any specialty drugs moved from the medical benefit to the pharmacy benefit, for example through a site-of-care or specialty pharmacy program. That can raise reported pharmacy spending even if total drug spending stays flat, although the change in benefit channel can also affect the actual cost. See What Is My Claims Report Telling Me?

How it hits your plan

Self-funded plans bear their covered claims costs directly, subject to stop-loss protection. Level-funded plans also reflect claims experience, but their fixed monthly payments, potential settlements and renewal adjustments depend on the contract. Stop-loss may reimburse part of one member's very large claims above your specific deductible. Check whether pharmacy claims are covered and which incurred and paid dates qualify under your stop-loss contract; claims handled through a separate PBM may need special attention. Many groups this size have a specific deductible well above the $48,000 a year in this example, and a member with an ongoing specialty claim can get a higher deductible of their own (a "laser") at renewal. See Stop-Loss Insurance.

Fully insured large groups usually see it at renewal, weighted by how much credibility the carrier gives your own claims.

ACA-compliant fully insured small groups are generally community-rated, so their own pharmacy claims don't directly determine their premium. Rates reflect the insurer's applicable market-wide experience and permitted rating factors, including age, geography, family composition and tobacco use where allowed. Small group generally means 1 to 50 employees, and states can expand it to 100. The insurer's experience and projected drug trend show up in its filed rate increase.

Questions to ask your broker, carrier or PBM

Self-funded and level-funded plans can usually ask all of these. What fully insured groups can get varies widely by carrier, contract and group size: some receive aggregated utilization or specialty reporting, others very little, and the rebates go to the carrier.

1. Are we looking at gross pharmacy claims, plan-paid claims, or net costs after rebates? Can you show the year-over-year increase on the same basis? A PBM's reported drug trend and your plan's net spending trend can tell different stories.
2. How much of the increase came from price, how much from more prescriptions, and how much from a shift to more expensive drugs?
3. What were our top drugs by cost this year and last, and how much was specialty and GLP-1s?
4. How much of the increase came from a small number of members? Ask for de-identified, aggregated data, and don't try to identify the members. Employers can't use health information for employment decisions, and self-funded plan sponsors who need more must follow HIPAA's plan-sponsor rules.
5. How much did we receive in rebates, for which periods, and when were they paid?
6. Did our formulary, PBM contract or drug benefit design change this year?
7. What would next year look like with a full year of this year's new treatments?

If the answers don't add up, get an independent second opinion.