Rising Prescription Drug Prices Require Creative Approaches to Health Care Financing

Prescription drug spending has reached an all-time high, nearing $450 billion in 2023 and growing faster than both inflation and overall healthcare costs. This surge in drug prices significantly burdens Americans’ household budgets forcing many to choose between essential medications and other expenses. It is becoming increasingly common when picking up prescriptions, more and more consumers are faced with the harsh reality of either leaving their medication behind or sacrificing other necessities to cover the cost.

Pharmacy costs have surged by 13% this past year, nearly double the increase in overall healthcare costs (7%) and over four times the general inflation rate of 2.9%. Given that more than half of Americans rely on prescription medications, with over a quarter taking four or more, this trend poses a significant threat to public health and economic stability. The impact is particularly severe for individuals with chronic illnesses who need medication daily, such as those with diabetes. 

Employers are acutely aware of the impact these increases are having on their employees’ well-being and their own ability to offer competitive benefits. Almost all employers (99%) believe drug prices are the biggest threat to affordability and are looking for new ways to provide much needed access to medication. Fortunately, new models addressing the need for simplified and streamlined healthcare payments have emerged for employers. Taking advantage of these solutions can help reinvigorate an employer’s health benefits and quickly address the dire situation many employees face relative to affording their medication. 

The prescription drug trade-off 

For millions of Americans living paycheck to paycheck, the decision to prioritize their health over basic living expenses is becoming increasingly dire. Each month, employees are forced to make impossible choices like choosing between filling a necessary prescription or covering the cost of essentials like groceries, gas, or utilities. 

As a result, a staggering 30% of adults report skipping doses or splitting pills to make prescriptions last longer. This is a dangerous precedent and compromises a person’s health, productivity, and overall well-being. In addition to jeopardizing, one’s physical health, the financial burden of managing healthcare costs also impacts mental health by increasing stress levels and anxiety.

Financial insecurities cause emotional strain, worsen mental health, increase stress-related diseases like high blood pressure, and can lower morale at work and home. This cycle of financial stress and compromised health can lead to more sick days and less engagement. 

These ripple effects extend beyond employees to employers. When employees forgo necessary medications, the consequences manifest in increased absenteeism, elevated stress levels, and lower workplace productivity. This escalating issue impacts both employees’ health and productivity and employers’ bottom lines. However, a simplified employer-offered solution can help address both issues at once. 

Enhancing employee benefits through creative financing 

The need for enhanced employee health benefits has never been more urgent. Offering innovative payment solutions that improve access to affordable medications can be a vital lifeline for cash-strapped employees. 

These solutions help cover the immediate cost of prescription drugs and reduce care avoidance. With nearly half of U.S. adults expressing difficulty affording healthcare costs, creative financing options provide employees with an immediate and simple solution when they find themselves at the pharmacy unable to cover their prescription costs. 

One such approach involves offering interest-free financing for healthcare expenses, including prescription drugs, to pay for the cost not covered by insurance. This method allows employees to access necessary medications without the burden of immediate payment, thereby reducing financial stress and encouraging medication adherence. Unlike traditional financing methods, these benefits provide access to financing regardless of a person’s financial situation and do not carry hidden fees, deferred interest, or other opaque terms that can potentially cause further financial harm.

Employers can partner with payment solutions providers to offer employees a branded spending card for health, pharmacy, and wellness expenses. With this solution, employers set a spending limit, allowing employees to use the card for approved purchases such as prescription drugs and other medical expenses. Then employees can repay the balance over time through flexible payment terms that they choose. By offering such benefits, employers can help employees build financial resilience by reducing the financial stress caused by managing healthcare costs, leading to improved health outcomes and increased employee satisfaction. 

Prioritizing payment solutions that provide quick access to capital without strings attached, helps all employees afford their prescriptions and ongoing care, removes financial barriers, and supports a healthier workforce today. With creative financing solutions, employees are more likely to seek out necessary care earlier and adhere to prescribed treatments. This leads to better health outcomes, reduced financial burdens, improved employee morale and reduced absenteeism, benefiting both employers and employees.