01 MARKET SIGNAL
Prescription Drug Rejections Rise 67% as Access Restrictions Expand
A new study published in JAMA found that formulary-related prescription drug rejections increased 67% between 2018 and 2024, rising from 24.3% to 40.7% of initial fill attempts for brand-name medications without generic competitors.
Among prescriptions initially rejected, nearly half resulted in patients receiving neither the originally prescribed medication nor another drug in the same therapeutic class within 90 days. Patients who eventually received treatment experienced an average delay of approximately 12 days.
The findings highlight the growing reliance on formulary exclusions, prior authorization, and step therapy as mechanisms for managing prescription drug utilization and spending.
02 WHY THIS MATTERS
Controlling Utilization Is Not the Same as Controlling Cost
Traditional pharmacy benefit models have long relied on restricting patient access as a primary means of managing prescription drug expenditures.
While these measures can reduce spending by discouraging unnecessary utilization or directing patients toward alternative therapies, they do little to address a separate and equally consequential issue: the underlying unit price paid for medications.
For employers, this distinction is critical. A health plan may successfully limit access to certain medications while continuing to overpay for the prescriptions it ultimately approves.
Meanwhile, formulary decisions are often influenced by manufacturer rebates, PBM compensation arrangements, and other financial incentives that may not consistently align with the lowest available net cost for the employer.
The result can be a pharmacy benefit structure that introduces additional barriers for employees without fully capturing the economic opportunities available through more efficient purchasing.
03 HPX PERSPECTIVE
Better Pharmacy Economics Begin With Better Purchasing
At HPX, we believe sustainable pharmacy cost management requires a fundamental shift in emphasis: from restricting patient consumption to improving the economics of the medications patients actually need.
Traditional carrier-bundled pharmacy arrangements often operate through rigid formularies, contracted pricing channels, and PBM compensation structures that limit an employer’s ability to pursue alternative purchasing opportunities.
Spread pricing, retained manufacturer rebates, and formulary incentives can introduce financial conflicts between the entities administering pharmacy benefits and the employers financing them.
We believe the greater opportunity lies in addressing these structural inefficiencies directly.
This means independently evaluating the net acquisition cost of medications, maximizing manufacturer assistance and rebate value, and maintaining the flexibility to source prescriptions through alternative channels when economically advantageous.
Importantly, utilization management still has a legitimate role in promoting clinical appropriateness and patient safety. But it should complement disciplined purchasing, not substitute for it.
The objective should not simply be to reduce the number of prescriptions filled. It should be to ensure that every clinically appropriate prescription is purchased at a competitive net price, with minimal unnecessary disruption to the patient.
04 LOOKING AHEAD
From Restrictive Formularies to Dynamic Pharmacy Management
As prescription drug pricing becomes increasingly fragmented across manufacturers, PBMs, specialty pharmacies, and alternative distribution channels, the limitations of static pharmacy benefit arrangements will become more consequential.
Employers should increasingly evaluate pharmacy performance through two distinct lenses: whether employees can access clinically appropriate medications without unnecessary barriers, and whether the plan consistently secures competitive net pricing for those medications.
Achieving both requires more than annual formulary reviews or conventional PBM contract negotiations. It requires proactive administration, independent oversight, and the ability to adapt purchasing decisions as market conditions change.
For CFOs and HR leaders, the opportunity is to move beyond the traditional tradeoff between controlling pharmacy expenditures and preserving employee access.
The next generation of employer pharmacy benefits should be measured not by how effectively it restricts utilization, but by how efficiently it purchases necessary care while supporting the patient experience.