GLP-1s and Biosimilars Reshape Prescription Drug Market

Inflation, additional treatment options approved by the U.S. Food and Drug Administration (FDA) and increased utilization of high-cost medications led to rising drug costs in 2024. In 2025, the transformation of the prescription drug market will continue due to many of the same factors, as well as changes to Medicare Part D and the potential for pharmacy benefit manager (PBM) reform.

The following are some of the most significant trends that are reshaping the prescription drug market.

GLP-1 Drugs

GLP-1 drugs have gained rapid popularity from plan participants eager to lose weight and improve their overall health. Mounjaro (which has the active ingredient tirzepatide), Ozempic and Rybelsus (which both use the active ingredient semaglutide) are approved for treating diabetes but are commonly prescribed off-label for weight loss. Zepbound (tirzepatide) and Wegovy (semaglutide) are drugs that use the same active ingredients but are approved to treat obesity for qualifying patients. In addition to treating Type 2 diabetes and obesity, the active ingredients in these medications have shown the potential for treating other conditions, including Alzheimer’s disease, heart disease and sleep apnea.

While most health care plans cover GLP-1s for qualifying Type 2 diabetes patients, employers are much more hesitant to cover them for weight loss. The high cost of these medications—combined with the need for ongoing, long-term usage—presents a significant financial commitment that some employers are unwilling to make.

The popularity of these drugs is likely to increase in 2025 as more patients become aware of GLP-1s and take action to improve their health.

Biosimilars

Biosimilars are an emerging category of biological medications. These treatments are similar to a reference drug, which is an existing biologic that was previously approved by the FDA. For a biosimilar to be approved, there must be no meaningful differences in safety and effectiveness from the original biologic. Compared with original biologics, biosimilars are lower-cost, allowing greater patient access. New biosimilars are gaining FDA approval and entering the market each year. As of 2024, over 60 biosimilars have been approved. Biosimilars have the potential to help reduce costs in a prescription drug market that is otherwise experiencing significant inflationary pressure. However, the widespread adoption of biosimilars in the drug market has had its share of challenges related to drug exclusivity rights, active patents, approval processes and inconsistent success rates for developing biosimilars.

Cell and Gene Therapies (CGT)

Advanced treatments, such as CGT, are designed to treat conditions like blood and lung cancer, sickle cell anemia and spinal muscular atrophy. These therapies demonstrate significant medical advancement but come with a high price tag.

CGT operates uniquely compared to other treatments. CGT is generally administered once or twice over a patient’s lifetime. With CGT, payment occurs upfront, and the patient experiences health benefits over time. Some insurance and pharmaceutical companies may offer nontraditional payment models, such as risk-sharing arrangements, performance-based payments that are determined by the effectiveness of the treatment, and other installation models that spread out the cost of the treatment.

The FDA has approved around 40 CGT products. The agency is expected to approve between 10 and 20 treatments in 2025, and hundreds more are currently in clinical trials and could become available in the coming years. With more individuals eligible each year for treatments like CGT, employers will need to make decisions about coverage and mitigating cost exposures.

Medicare Part D Changes

As a result of the Inflation Reduction Act, the Medicare Drug Price Negotiation Program allows the federal government to negotiate the prices of drugs for Medicare-eligible individuals. The first round of negotiations concluded, and the new pricing is effective Jan. 1, 2026. Medicare will select up to 15 more drugs covered under Part D for negotiation in 2027 by Feb. 1, 2025. In addition, beginning in 2025, Medicare Part D plans will include a $2,000 cap on prescription drugs covered by the plan.

PBM Reform

There is broad support for revamping PBM practices, such as increasing transparency on rebates, detaching drug prices from PBM compensation and expediting generic drugs for some high-cost prescriptions. Individual states have enacted laws that adopted more regulations of PBMs, but there is bipartisan support for increased federal regulations that could impact how PBMs operate.

Summary

In 2025, employer efforts will likely turn to understanding these growing categories of specialty drugs, adjusting plan formularies and managing prescription drug benefits to balance workforce needs with the reality of rising drug costs.

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