Stop Loss and the Surprise Claim | PBMI 2025

High-cost specialty and orphan drugs are expected to dominate new drug approvals, and the pharmacy benefit manager industry, working with stop-loss carriers, can help self-insured employers better manage claims, said panelists at a session at the Pharmacy Benefit Management Institute’s annual meeting in Orlando.

Specialty drugs continue to be at the top of many spending reports, and employers predict healthcare costs will increase about 9% for 2026, according to a new report from Business Group on Health’s Employer Health Care Strategy Survey. One of the biggest cost drivers is cancer care. For the fourth year in a row, the growing prevalence of cancer diagnoses and escalating costs have led to increased spending.

Specialty medicines will represent about 46% of global drug spending by 2029 and 54% in developed markets, according to IQVIA’s most recent Global Use of Medicines report. In the last 20 years, more than 1,000 novel drugs have been launched globally, including almost 400 in the past five years. In the United States in 2024, 48 novel drugs were launched, representing a 22% increase from the 2015 to 2019 period. Specialty biologic drugs are expected to have an impact on spending, IQVIA predicts.

Orphan drugs, medications that treat conditions that affect fewer than 200,000 people in the United States, are predicted to make up a fifth of the forecasted drug sales by 2030, according to a report from Evaluate Pharma.

Michael Agostino, RPh

“Orphan drugs are becoming the norm, and they’re not getting any less expensive,” Michael Agostino, RPh, Network of Advanced Specialty Healthcare, said during the PBMI panel discussion. “What are the strategies going to be put in place to cover these high-cost claims? How are you preparing for them, other than just filling up a bucket full of money to get ready for the unknown?” he asks.

Stop-loss insurance, according to speakers at the PBMI session, can help self-insured employers manage some of these high-cost drugs, especially the surprise claims. Catastrophic claims are increasingly cited as a reason for increased benefit costs, according to a survey by the International Foundation of Employee Benefit Plans.

Stop-loss insurance provides self-insured employers with coverage for catastrophic or unpredictable claims. With stop-loss coverage, the insurance company assumes the liability for losses and reimburses employers for claims that exceed certain limits.

Stop-loss insurance has traditionally been the safeguard against catastrophic claims. But new treatments, such as cell and gene therapies, are shifting the financial landscape in ways that require new solutions, panelists said.

Debbie Hoffer, RN

Stop-loss coverage is not used for every high-cost claim, but for the unexpected, high-cost claim, said Debbie Hoffer, RN, an associate vice president at CompanionCARE, which provides stop loss and other insurance products. “Each year, the stop-loss carrier looks at the claims experience, and there’s also a process of disclosure on the part of the employer,” she said.

Hoffer said that if an employer employs someone with hemophilia at the time of the contract, that would be a known cost for factor replacement. “But if a new employee is hired after the contract is signed and that employee consumes $900,000 in factor, that is an unknown cost,” she said.

The five top high-cost drivers for self-funded plans are neonatal intensive care; oncology, including targeted and CAR T-cell therapies; specialty drugs; complex cardiology; and cell and gene therapies. Spending on these therapies has seen the largest growth due to unit cost increases and an expanding pipeline, Hoffer said.

Kerri Tanner, Pharm.D.

Employers’ focus, however, over the last few years has been on the high cost of GLP-1 drugs for treating patients with diabetes and obesity, but now there seems to be increased concern over cell and gene therapies, Kerri Tanner, Pharm.D., chief operating officer at PayerAlly, said during the session.

“We’re starting to get questions about how stop-loss insurance can be used for pharmacy, where historically stop-loss covered medical because pharmacy was a smaller component,” she said. “One of the questions we get asked is to help evaluate vendors and think to the future with a combination of medical and pharmacy. stop loss.”