Insurance Curator Health plans redesign formularies and tighten specialty drug controls after volatile price spikes
By [Staff Writer]
Who: Major health insurers and pharmacy benefit managers; What: are overhauling drug formularies, escalating prior‑authorization and step‑therapy rules, and creating tighter specialty‑drug tiers; When: changes accelerated in mid‑2024 and intensified through 2025; Where: primarily in the United States with parallel re‑pricing and benefit shifts affecting employer, Medicare and commercial markets in other high‑income countries; Why: insurers say rapidly rising list and net prices for specialty medicines — and new federal cost‑sharing rules that shift risk onto plans — made benefit redesigns necessary to protect budgets and control premiums. (oliverwyman.com)
Insurers and their pharmacy benefit managers (PBMs) have embarked on the most extensive benefit and formulary changes in years, moving drugs into higher tiers, excluding certain medicines from standard coverage, and imposing stricter utilization controls for specialty products. The moves reflect a calculated response to soaring demand and list prices for new specialty therapies — most visibly GLP‑1 weight‑loss and diabetes drugs — and to programmatic changes from the Inflation Reduction Act that increase plans’ share of very high drug costs beginning in 2024–2025. (beckershospitalreview.com)
What insurers changed — and why they say they had to
Across commercial and Medicare markets, carriers redesigned formularies for 2025 plan years, in some cases removing thousands of drug formulations from coverage or shifting large numbers of drugs into higher cost‑sharing tiers. An Oliver Wyman analysis of 2025 plan designs found CVS Health removed more than 10% of drugs from some formularies and shifted nearly a quarter of medicines to higher tiers, while UnitedHealth added far more drugs than peers but still adjusted placements for many high‑cost products. Insurers cite the twin pressures of manufacturers’ price-setting and new Medicare cost‑sharing rules that move a bigger share of catastrophic costs to plan sponsors. (oliverwyman.com)
Blue Cross Blue Shield of Rhode Island, for example, disclosed detailed 2025 formulary adjustments that included hundreds of drugs moving to higher tiers and dozens being moved onto specialty tiers — decisions that change patients’ out‑of‑pocket burden overnight. Insurers say such moves let plans preserve premiums and sponsor budgets while still keeping a set of covered alternatives available. (bcbsri.com)
Medicare Part D redesign is central to the shift. The Inflation Reduction Act capped Part D out‑of‑pocket spending and changed who pays in the catastrophic phase, meaning plan sponsors now bear more of the tail‑risk for the most expensive drugs. Carriers responded by altering deductibles, increasing coinsurance on specialty tiers, and tightening utilization management to limit exposure to runaway specialty spending. Analysts and plan documents show more plans are using coinsurance for specialty drugs — often 25–30 percent — and are creating separate specialty tiers with higher cost sharing. (kff.org)
“Plans are being forced to create guardrails,” said Juliette Cubanski of the Kaiser Family Foundation, noting that Part D redesign reduces Medicare’s share of catastrophic spending and places greater responsibility on insurers to manage costly therapies and the financial impacts on premiums and plan solvency. (kff.org)
Specialty drugs and the GLP‑1 shock
The most visible driver of recent changes has been the explosive demand for GLP‑1 class medicines (including semaglutide and tirzepatide products) for obesity and diabetes. Rapid uptake, supply fluctuations and list prices prompted many insurers to restrict coverage for GLP‑1s prescribed for weight loss, to tighten prior authorization criteria for diabetes indications, or to designate single preferred products on formularies. That has translated into outright exclusions for weight‑loss indications at some carriers and expanded utilization management for diabetes uses. (beckershospitalreview.com)
Examples are widespread: select Blue Cross Blue Shield affiliates, several large regional carriers and some employer plans removed coverage for GLP‑1s for weight‑loss indications or added strict BMI, documentation and lifestyle‑program requirements that must be fulfilled before coverage is approved. In Michigan, Blue Cross Blue Shield said it would stop covering GLP‑1 drugs prescribed solely for weight loss for many fully insured large‑group plans effective Jan. 1, 2025, affecting thousands of members. (bcbsm.com)
A December 2024 survey and multiple market analyses found that insurer coverage for some popular GLP‑1 agents declined notably between 2024 and 2025, leaving millions facing higher out‑of‑pocket costs or restricted access if their prescriptions did not meet tighter clinical criteria. Employers and plan sponsors, already worried about inflationary pressure on health benefits, are demanding more predictable budget outcomes. (forbes.com)
PBMs, transparency pledges and legal pressure
The industry’s middlemen — PBMs such as CVS Caremark, Express Scripts (Evernorth) and Optum Rx — have been central actors, both as targets of regulatory scrutiny and as agents of change. The Federal Trade Commission filed a high‑profile lawsuit in 2024 alleging that PBM rebate practices inflated insulin costs and distorted formularies, and that litigation and public pressure have prompted PBMs and insurers to publicly pledge reforms. (politico.com)
In early 2025 Cigna’s Evernorth announced a package of affordability and transparency reforms intended to pass negotiated discounts through to patients and to improve formulary clarity. “We know that health care and prescription drugs need to be more affordable, and that coverage needs to be more transparent and less complex,” Evernorth President and CEO Eric Palmer said in the company’s Jan. 29, 2025, announcement. Optum Rx, part of UnitedHealth, touted steps meant to reduce the burden of prior‑authorizations and simplify pharmacy access for a targeted set of medicines. Industry executives say the moves are designed to blunt political heat while preserving negotiating leverage with manufacturers. (evernorth.com)
But transparency pledges are not a panacea. PBM and insurer changes can produce winners and losers: plans that secure deeper net discounts may prefer one brand over another, shrinking real choice for patients while lowering plan costs. In several cases PBMs have designated a single brand as “preferred” on national formularies, prompting competitors to be shifted to non‑preferred status or removed from benefit lists. Analysts warn this consolidation can reduce bargaining competition among manufacturers even while it lowers short‑term plan costs. (forbes.com)
Patient impact and access concerns
For patients who rely on specialty therapies, the new environment can mean more paperwork, longer waits for approvals, higher coinsurance and, in some cases, full out‑of‑pocket responsibility. Patient advocates and physicians have reported increasing administrative burdens related to step therapy and prior authorization. One survey of prescribers found a vast majority struggling with prior authorization for weight‑loss medications. Delays or denials can force patients to switch therapies — sometimes with medical consequences — or to abandon treatment altogether. (webmd.com)
Insurers defend tighter controls as clinically appropriate and fiscally necessary. “Medication authorizations are important for ensuring safe, appropriate, evidence‑supported use of drugs,” Optum Rx’s Patrick Conway said when describing the company’s prior‑authorization simplification. Carriers argue that utilization management paired with preferred‑drug placement helps direct patients to therapeutically equivalent or safer and less costly options. (unitedhealthgroup.com)
Yet clinicians and advocates say that some restrictions — such as requiring documented participation in weight‑management programs or stringent BMI thresholds — can be blunt tools that fail to account for individualized clinical need. “Many physicians find the work of navigating PAs unsustainable, which can reduce willingness to prescribe needed therapies,” said a clinician quoted in a recent industry survey. (webmd.com)
Why insurers are changing benefit design now: the math
Several forces converged to make 2024–2025 a turning point. First, blockbuster specialty launches — notably in diabetes and obesity — rapidly increased utilization among patients, producing unexpected spikes in specialty spend. Second, policy changes under the Inflation Reduction Act reallocated financial responsibility within Medicare Part D, capping beneficiary out‑of‑pocket costs while increasing plan liability beyond earlier levels. That combination raised the prospect that without adjustments, plan sponsors would face sharp premium increases or unsustainable budget volatility. (kff.org)
Market analyses show concrete shifts: many Part D plans moved to coinsurance and added or rebalanced specialty tiers in 2025. KFF’s review of 2025 Part D plan offerings documented more enrollees in plans charging coinsurance for preferred brands and non‑preferred drugs and a significant rise in the proportion of MA‑PD enrollees facing coinsurance rather than flat copays. Employer surveys also show most large employers continue to offer specialty tiers and are vigilant about containing their exposure to specialty price growth. (kff.org)
International perspective
While most of the activity and public debate has centered on U.S. markets, insurers in other high‑income countries are also rethinking coverage as makers of specialty medicines set global list prices and countries consider value‑based access. National payers with single‑payer bargaining power have used price negotiation, formularies and conditional access schemes to limit budget exposure. In contrast, the U.S. fragmented payer landscape has produced more localized and varied responses among private insurers and PBMs, increasing the likelihood of divergent access outcomes for patients depending on plan, employer, and state. (See analysis by Oliver Wyman for comparisons of carriers’ responses.) (oliverwyman.com)
The politics and regulatory backdrop
The industry’s moves have landed amid a volatile policy environment. Lawmakers and regulators have scrutinized PBM practices, rebate structures and list‑price inflation. The FTC lawsuit alleging anti‑competitive conduct by PBMs, and continuing congressional interest in drug pricing, amplify pressure on insurers to demonstrate affordability and transparency. Several insurers have announced consumer‑facing changes — including new point‑of‑sale discounting pilots and copay caps on insulin and select therapies — to preempt or respond to regulatory and political pressure. (politico.com)
What patients, employers and clinicians should watch
Experts recommend that employers and beneficiaries actively review plan formulary updates during open enrollment and ask sponsors about specialty tier cost‑sharing, prior‑authorization requirements, and any carve‑outs that might affect continuity of care. Clinicians are urged to document medical necessity when prescribing specialty therapies and to prepare for increased administrative appeals work when denials occur. Meanwhile, health policy analysts say lawmakers and regulators should monitor whether utilization management changes unduly restrict clinically appropriate access or produce inequitable outcomes. (kff.org)
Longer‑term implications and possible market responses
Industry analysts expect continued churn in formularies as PBMs and insurers negotiate deeper net discounts and steer utilization to preferred products, and as biosimilars and new competitors reach market over the next several years. The entry of oral agents and new classes that could attenuate demand or reduce unit prices — plus incoming Medicare negotiation of selected drugs in 2026 and 2027 — may alter the calculus for benefit design. Still, specialists warn that benefit redesigns that rely heavily on utilization controls without parallel patient‑support programs could exacerbate access disparities. (nybestagency.org)
Voices from stakeholders
“We know that health care and prescription drugs need to be more affordable, and that coverage needs to be more transparent and less complex,” Evernorth’s Eric Palmer said as his company unveiled transparency reforms in January 2025. Optum Rx’s Patrick Conway framed prior‑authorization simplification as an access measure, saying the company planned to eliminate a share of reauthorizations to ease patient and clinician burdens. Industry spokespeople maintain that coupled with smarter formulary placement, these steps can balance access and affordability. (evernorth.com)
Patient advocates and clinicians express more guarded views. “Administrative barriers can be life‑altering for patients who rely on specialty treatments,” said an advocacy group representative in recent media coverage. Clinicians point to cases where therapy interruptions occurred while appeals were processed, creating clinical risk and additional downstream costs. (webmd.com)
Conclusion
Health plans’ sweeping 2024–2025 formulary and benefit redesigns are a direct industry response to a volatile specialty drug market, shifting federal rules that place greater financial responsibility on plans, and intense public and regulatory scrutiny of PBMs. The near‑term effect is a patchwork of tighter controls, higher patient cost‑sharing for specialty tiers, and a heavier administrative load for prescribers and patients. The longer arc will be shaped by continued negotiations between insurers, PBMs and manufacturers, broader adoption of biosimilars and oral alternatives, regulatory outcomes such as the FTC case, and whether policymakers pursue further rules to align incentives across the drug supply chain. For now, the result is increased complexity: patients and clinicians must navigate a rapidly changing benefits landscape, while employers and insurers try to reconcile access with fiscal sustainability. (oliverwyman.com)
Sources: Oliver Wyman, Evernorth (Cigna) press release, Optum Rx press release, Kaiser Family Foundation, PubMed/peer‑reviewed analysis of Part D changes, Blue Cross & Blue Shield of Rhode Island plan documents, Becker’s Hospital Review, AJMC, Politico. Specific reporting and statistics cited within the article are drawn from the linked sources above.