Recently, I’ve been concerned about the accelerating inflation in healthcare costs. According to the Ministry of Labor’s CPI statistics, as of August, healthcare expenses have risen by an annualized rate of 4.2%, significantly outpacing the overall inflation rate of 2.9%. The cost of doctor consultations has increased by 3.5%, and hospital and outpatient services have surged by 5.3%.

This is putting considerable pressure on companies. Multiple business group surveys predict that large corporations will see an average 9% increase in health insurance costs by 2026, the highest level of medical inflation since 2010. In other words, the most severe situation in the past 15 years is approaching.

What’s interesting is how companies are responding. A survey by Mercer found that over half of companies are considering passing the increased costs onto employees. However, a survey by BGH indicates that most large companies are first exploring other cost-cutting measures. In other words, shifting the burden onto employees is seen as a last resort.

CPI statistics show prescription drug prices have only increased by 0.9%, but the main driver of rising healthcare costs faced by companies is expensive pharmaceuticals. Particularly, cancer treatments and GLP-1 weight-loss drugs like Novo Nordisk’s Wegovy and Eli Lilly’s Zepbound are pushing healthcare expenses upward. BGH predicts drug costs will increase by 12%, with cancer treatments and weight-loss drugs, such as がん治療薬 and the GLP-1 drugs Wegovy and Zepbound, accounting for most of the healthcare expenditure.

An interesting phenomenon is occurring here. About two-thirds of companies with over 20,000 employees are providing access to GLP-1 treatments. Meanwhile, some large companies are quietly informing employees that they can purchase cheaper drugs on the open market using health savings accounts (健康貯蓄口座). In other words, companies are concerned about healthcare costs but are not trying to prevent employees from accessing these drugs—they simply don’t want to pay for them.

In fact, direct-to-consumer options like Lilly Direct and Novocare online pharmacies offer drugs with list prices over $1,000 at about half price. According to Paytient’s CEO, purchasing GLP-1s is now the top category of out-of-pocket spending in pre-tax flexible spending accounts and health savings accounts (健康貯蓄口座) for costs not covered by insurance. Usage of GLP-1 providers has tripled from last year to this year.

However, there are concerns about this cash payment trend. Low-income workers may not be able to afford out-of-pocket costs, risking their exclusion from treatment. Therefore, companies are beginning to explore ways to ensure more equitable access.

Existing contracts with pharmacy benefit managers (PBMs) prohibit direct cash payments, as doing so would violate agreements with both drug manufacturers and employers. But companies are pressuring PBMs for better options and are starting to consider new types of benefit administrators. New entities, including startups, are building products and solutions to negotiate with manufacturers on cell and gene therapies on behalf of pooled corporate groups.

This issue surrounding GLP-1 and healthcare costs is essentially a stress test for employers and PBMs. Because these are clinically effective drugs that can change lives, they will increasingly force choices regarding funding. If resolved well, this could provide a blueprint for addressing all healthcare-related drug costs that pose challenges to health insurance.