GLP-1s aren’t the only cost concerns employers should worry about

It's no secret that life in the United States is more expensive than ever. Inflation is driving prices across a multitude of sectors to record highs, and healthcare costs are deep among them. According to a recent Business Group on Health (BGH) survey, healthcare cost volatility has "intensified," with a 9.2% increase predicted for 2027. This now marks the third consecutive year that actual costs have exceeded employer predictions. In fact, costs could potentially rise to a cumulative 76% — double the rate of inflation — in just 10 years.

"An array of forces across the healthcare industry, from soaring hospital and drug costs to the rapid innovation of specialized treatments and unintended impacts from federal health policy changes, have contributed to a considerable unpredictability in cost," said Ellen Kelsay, president and CEO of Business Group on Health. "This represents an unfortunate new reality for employers, who now face growing difficulty in budgeting and forecasting. It's a call to take a more disruptive approach and rethink how to deliver value and improved health outcomes."

There are, of course, a multitude of factors driving this dismal statistic, but many are quick to blame GLP-1s for this drastic change. It's a fair assumption; the rapid growth in utilization has driven pharmacy healthcare spending up, and GLP-1s now account for 25% of it, projected to increase 12% in 2026 alone.

But the real, and terrifying, threat to healthcare costs is hardly new. In fact, for the fifth year in a row, the survey revealed that cancer healthcare spending remains the top cost driver (70%), which is significantly up from 58% in 2025.

“This dramatic one-year change is fueled by several observed factors,” Jim Winkler, chief strategy officer for Business Group on Health, tells Managed Healthcare Executive. “The most significant is price of newer therapies, especially oral and infused therapies, regardless of whether they are hospital- or outpatient-dispensed. Further drivers include increases in new diagnoses, especially among people at younger ages, and the overall cost of managing complex disease for a longer period of time.”

Obesity wasn't even among the top cost-driving conditions, despite GLP-1s commandeering most of the conversation.

While musculoskeletal and cardiovascular conditions again ranked second and third, respectively, employers also identified several emerging cost drivers:

• Musculoskeletal conditions: 68%
• Cardiovascular conditions: 37%
• Maternity: 21%
• Gastrointestinal conditions: 15%
• Autoimmune conditions: 14%

Treatment for many of these conditions often involves complex care and costly therapeutic approaches.

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What cancer is truly costing

A cancer diagnosis can be devastating on several emotional and physical levels, but a harsh reality is that cancer is also financially devastating to both patient and insurer. A Journal of the National Cancer Institute (JNCI) study revealed that spending was greatest for patients with advanced cancers, particularly near end-of-life, topping more than $100K a year. To break it down: costs were highest during the initial phase of care, averaging $45,063, compared with $7,141 per year during the continuing phase.

Oral prescription drug costs rose across all three phases over time, with the steepest increase occurring at end of life — climbing from $4,800 in 2013 to $11,600 in 2019. Medical service and hospitalization costs, by contrast, held relatively steady once adjusted for inflation.

“Experience shows that traditional oncology drug and care costs are expensive and rising,” says Winkler, though he clarified they did not survey on this specific point. “The use of sophisticated precision medicine, [cell and gene therapies], and even CAR-T therapies is still not widespread. As these approaches become more widely adopted, we expect cancer to become an even more acute cost driver for employers.”

The numbers for employers and insurers look bleak as well.

• QBE stop-loss report (June 25, 2026): Neoplasms account for 36% of all stop-loss claim reimbursements — the leading diagnosis category. At the $200,000 deductible level, cancer claim severity rose 12% year-over-year and claim frequency climbed nearly 30%. Overall, the frequency of employees exceeding $200,000 in annual claims rose almost 20%, and pharmacy now eats 24%–27% of total plan spends, driven largely by specialty drugs.
• Sun Life High-Cost Claims report (June 4, 2025; 65,000+ claims across 3,000 employers, 2021–2024): Cancer is the single most expensive condition category — malignant neoplasms alone drove $1.2 billion in spending across roughly 5,000 claims in 2024, triple the spend of the next-highest condition (cardiovascular disease). Eight of the ten costliest drugs treat cancer; Keytruda alone accounted for $84.4 million in spend, the single highest-spend drug tracked.
• MedBen/Sun Life million-dollar-claims analysis (May 27, 2026): Million-dollar-plus claims rose 46% from 2022 to 2026. Blood cancers were the single costliest category, averaging $5.45 million per claim in 2025 — well above other high-cost conditions.

“At present, the use of outcomes-based payment is low, though employers are interested in exploring these mechanisms. Employers are more immediately adopting centers of excellence and/or specialized contract arrangements to drive patients toward high-value providers,” says Winkler. “Given the looming wave of costs from cell and gene therapies, employers and their payer partners need to put all pricing alternatives on the table for consideration.”

The changing healthcare landscape and what may lie ahead

Employers are being forced to fundamentally reassess their healthcare offerings. According to the BGH survey, 94% of employers see health and well-being as vital to their workforce strategy, thusly causing employers to get creative on how to care for their employee's health without cutting crucial coverage.

The good news is there have been breakthroughs in biosimilar advancements and legislation that could fundamentally lower costs in the future. The market is expected to nearly double over the next decade. Thanks to faster regulatory pathways and increasing competition, development is sprinting ahead. A UCLA study found that the savings for insurers in particular were substantial. After adjusting for differences among patients and treatment patterns, payers spent an average of $8,959 per month on patients who exclusively used biosimilars, compared with $12,779 for those who exclusively used the originator — a difference of $3,820 per month, or more than $45,800 annualized per patient. Patients saw savings too, though smaller in scale: average monthly out-of-pocket costs were $118.90 for biosimilar users versus $158.40 for originator users, a $39.50 monthly difference.

Those payer savings also compound over time. Biosimilar entry was associated with lower prices and declining market share for the originator products: the average sales price of the three originators fell 3.8% per year after biosimilars entered the market, while their market share dropped by about 30% annually among commercially insured patients and 31.5% in Medicare Part B. The average sales price of the 12 biosimilars in the study fell even faster, declining 12.4% per year. For insurers, that means the per-patient savings from biosimilar use are reinforced by continued downward price pressure across the entire drug class.

But in reality, employers should be concerned about both cancer and GLP-1 costs.

Winkler notes, “79% of employers voiced concerns about long-term costs associated with GLP-1s for weight management. As GLP-1s become indicated for additional conditions, we would expect cost concerns to remain. Cancer treatment overall — both today’s approaches and emerging solutions such as CAR-T, biologics and precision medicine — remains a cost concern. Cancer treatment, unlike GLP-1 coverage, is a complex set of medical and pharmaceutical services, making cost management challenging now and into the future.”

While cancer costs certainly aren't trending down, there is hope that with innovation, at least financial relief could be on the horizon for all impacted by this unforgiving disease.