The federal government has launched a major effort to bring down the cost of prescription drugs in the United States. The newly announced executive order takes aim at the price gap between what Americans pay for medications and what those same drugs cost in other developed nations. As a health benefits consultant working across Indiana, I’m watching this development closely. If you’re responsible for Indiana Group Health Insurance employee benefits or just trying to make sense of rising health insurance costs, this could hit close to home.
What’s in the Executive Order?
The new order pushes drug manufacturers to lower prices on high-cost medications, particularly those where the domestic price far exceeds what’s paid abroad. If drugmakers don’t cooperate voluntarily, the federal government has said it will take steps to enforce international price parity.
One class of drugs getting immediate attention is GLP-1s, which are commonly used to treat diabetes and obesity. These medications have seen a sharp rise in usage and price. For employers with self-funded or fully insured group plans, these drugs can drive large claims and renewal increases.
Why It Matters for Indiana Group Health Insurance
In Indiana, we’ve seen a significant shift over the past few years in pharmacy spend versus medical spend. In some groups, especially smaller or mid-sized ones, pharmacy costs now comprise 30-40 percent (or more) of total health plan spend. That’s a major shift from the traditional model where medical claims (hospital stays, doctor visits, surgeries) made up the bulk of costs. With high-dollar specialty drugs becoming more common, pharmacy benefits have turned into a primary cost driver for Indiana Group Health Insurance plans.
Here’s what that means:
1. Higher premiums: Due to pharmacy utilization, employers are seeing larger increases at renewal.
2. Plan design pressure: To keep premiums affordable, groups may raise deductibles or copays, especially for branded or specialty drugs.
3. Out-of-pocket risk: Employees and their families often end up shouldering more of the cost at the pharmacy counter, particularly if drugs fall outside formulary or tiered coverage.
Big Government Meets Big Pharma
The executive order is part pricing policy and part trade strategy. It’s designed to lower domestic prices and push other countries to stop undervaluing American-developed medications. The United States government is arguing that if countries like Germany or Canada paid closer to what we do, the entire global pricing structure would rebalance and Americans wouldn’t have to carry such a heavy share of research and development costs.
Agencies like the Office of the United States Trade Representative and the Commerce Department are being brought into the mix, and there’s talk of challenging what the administration views as discriminatory pricing practices overseas. At the same time, domestic agencies like the Federal Trade Commission and the Department of Justice are being asked to investigate anti-competitive behaviors that may be inflating prices here at home, especially in areas like pharmacy benefit management (PBM) and drug distribution.
What Should Employers Watch with Indiana Group Health Insurance?
If these policies take root, there’s potential for a meaningful shift in how pharmacy benefits are priced and delivered. But the impact won’t be instant and would likely take months or years to play out. The path may also change depending on who’s in control of the White House or Congress next.
In the meantime, Indiana employers should stay focused on what they can control:
1. Review your pharmacy benefit structure annually. Don’t assume last year’s PBM contract is still competitive.
2. Watch your claims reports. Look for high-cost drugs driving your plan spend and consider formulary or utilization controls if needed.
3. Educate employees on how to use pharmacy tools, price comparison apps, and generics whenever possible.
Final Thoughts
Prescription drug pricing is finally getting the national attention it deserves. But here in Indiana, the challenge is already at our doorstep. Pharmacy spend is no longer merely a footnote on your renewal spreadsheet, it’s one of the top three cost drivers for nearly every group we advise. And when premiums rise, it’s often the result of a few high-dollar medications hitting the plan. We’ll continue to monitor how federal policy evolves and keep working one-on-one with employers to build smarter benefit strategies that manage cost without sacrificing care. If you’re concerned about where your pharmacy spend is heading or what Indiana Group Health Insurance options you have to rein it in, let’s talk.
Tony Nefouse
President, Nefouse & Associates
Group Benefits | Individual Coverage | Employee Advocacy
