Specialty medications are expanding what is clinically possible, but not without a price. The affordability gap on these therapies continues to widen, placing sustained pressure on health plan budgets. U.S. prescription drug spending reached approximately $467 billion in 2024, with projections exceeding $556 billion by the end of 2026. As costs rise, employers and pharmacy benefit managers (PBMs) face increasing pressure to ensure that high-cost therapies remain both clinically appropriate and financially sustainable.
To address pharmaceutical affordability, employers are increasingly turning to technology-enabled savings strategies. Two commonly considered approaches are alternative funding programs (AFPs) and in-benefit optimization. AFPs are designed to address high-cost specialty therapies through alternative sourcing pathways, often unlocking meaningful savings in concentrated areas of spend. In-benefit optimization focuses on reducing waste within existing pharmacy benefit structures, enabling more consistent, system-wide cost control.
To determine which platforms best promote financial optimization, employers should first understand the operational steps to reduce pharmaceutical spending and identify how different analytics-powered systems address them.
The Operational Blueprint for Cost Reduction
To operationalize meaningful savings, PBMs should consider the following steps, many of which are incorporated into algorithm-driven optimization strategies:
- Recognize specialty spend concentrations: Identify which limited quantities of drugs or therapies are driving disproportionate expenses and validate whether each case is appropriate and necessary.
- Evaluate structure for inefficiencies: Use analytics to identify duplication, overlapping treatment, regimen complexity, and oversupply to determine avoidable refill occurrence.
- Stress-test disruptions: Assess time-to-therapy, interfacing burden, and risk of discontinuity when implementing spending reduction pathways.
- Prioritize prescriber operations: Implement scalable margin protections that benefit clinical workflows and support clinician operations.
- Ensure regulatory adherence: Certify financial pathways are defensible to auditors, members, regulators, and clinicians.
- Look beyond financial outcomes: Track adherence, continuity, complaints, and escalations to support patient well-being within savings pathways.
Implementing the included steps will help PBMs to establish secure, defensible savings. Yet pre-established spending reduction technologies and pathways can make these steps feel more achievable. For this reason, plan sponsors often consider structured cost-reduction platforms designed to address high-cost specialty spending, such as AFPs.
Understanding the Role of AFPs
AFPs are one way to address disproportionate drug spend across pharmaceutical markets. By leveraging alternative sourcing pathways, these programs can reduce costs for select therapies, particularly where traditional benefit structures offer limited flexibility. In many cases, AFPs coordinate access through manufacturer patient assistance programs (PAPs) or other external mechanisms to improve affordability for members. This option reduces patient out-of-pocket costs while enabling recipients to afford medications for life-saving or chronic conditions.
Implementing AFPs requires thoughtful coordination across stakeholders, including pharmacies, manufacturers, and support programs. These models often introduce additional documentation, communication, and process considerations that plan sponsors should evaluate alongside potential savings.
When applied with clear guardrails, AFPs can serve as an effective component within a broader cost management strategy, particularly for high-cost, high-impact therapies.
In-benefit optimization focuses on identifying and resolving inefficiencies within existing pharmacy workflows.
Technology-Enabled Savings Within the Benefit
In-benefit optimization allows PBMs to prioritize savings within their existing workflows. This approach leverages a unified platform to address common sources of excess spend to eliminate waste and inefficiencies.
Most drug and waste inefficiencies occur in a few areas within pharmaceutical channels. Duplicative or overlapping therapies are common sources, often aggravated by oversupply, early refills, and unused medications. There are also many opportunities for lower-cost medications through in-network channels that are often missed.
Prescription adherence can also prove detrimental for employer margins. If a patient’s regimen is overly complex, they are unlikely to follow their medication routine. By identifying where certain drug outcomes overlap with algorithm-guided recommendations, PBMs can eliminate unnecessary therapy use and achieve cost reductions without deviating from normal pharmacy pathways or extending services to multiple points of contact.
Automated drug-spend intelligence platforms that integrate in-benefit optimization directly into prescriber workflows eliminate redundant administrative tasks that exacerbate workloads. This approach allows plan sponsors to automatically optimize pricing in context of availability, policy changes, and updated drug costs.
Both AFPs and in-benefit optimization offer viable ways to establish savings. When PBMs apply clear guardrails, they can leverage both approaches concurrently to help operationalize each outlined step for margin protection. Layering both approaches using drug-spend intelligence platforms allows PBMs to address small specialty spend concentrations and achieve long-term, sustainable cost management.
Guardrails for Sustainable Drug Cost Strategies
Whether employers rely on in-benefit optimization, AFPs, or a hybrid model, they should ensure their chosen method meets several non-negotiable sustainable savings requirements to preserve defensibility.
The non-negotiables:
- Preserves continuity of therapy and regimen.
- Eases prescriber administrative workload.
- Operates within outlined compliance boundaries.
- Creates clear, documented savings.
When employers use available technology to achieve sustainable spending reductions that meet these requirements, benefit sponsors can confidently remain compliant while defending their margins.
Designing the Right Savings Strategy
With the affordability crisis squeezing margins across all stakeholders, plan sponsors must implement cost-saving strategies. In-benefit optimization addresses each cost-management step by implementing digital tools that work within pharmaceutical workflows to reduce costs. AFPs provide targeted solutions for high-cost therapies, while in-benefit optimization delivers broader, system-level efficiency by addressing waste within existing workflows.
Both options have the potential to create measurable savings when plan sponsors apply them with clear guardrails. When plan sponsors layer data-driven optimization strategies with clear guardrails, they can achieve sustainable cost control, improve member experience, and support long-term benefit stability.
About Ryan Czado, PharmD, MBA,
Ryan Czado, PharmD, MBA, is a pharmacy benefits expert with a background spanning PBMs, health plan consulting, and employer benefits strategy. With leadership roles at Express Scripts, Minuteman Health, Deloitte, and Lockton, Ryan has helped organizations streamline pharmacy programs and reduce costs. As Chief Pharmacy Officer at RazorMetrics, he focuses on simplifying prescription decisions to optimize healthcare spending.
