The Growing Cost of Specialty Drugs—And What Employers Can Do About It
September 21, 2026
Picture this: It’s benefits renewal season, and your broker slides a rate increase across the table. You ask the obvious question: What changed?
The answer may surprise you. Across Canada, employers are seeing rising benefits costs driven not by increased use across their workforce, but by the growing cost of a small number of specialty medications. These treatments can cost tens—or even hundreds—of thousands of dollars each year.
The employees who rely on these medications aren’t the problem. They need them, and they deserve access to them. The challenge is that many traditional group benefits plans weren’t designed to absorb these costs indefinitely.
The good news? There are plan designs that can help control costs while ensuring employees have access to the medications they need. The goal isn’t to reduce benefits—it’s to create a plan that’s more sustainable, more equitable, and better positioned to support your workforce over the long term. With the right strategy, you can protect your plan, protect your budget, and most importantly ensure that affected employees continue to receive full, uninterrupted drug coverage.
What’s Driving Rising Benefits Costs?
The numbers are stark—and they’ve remained consistent across virtually every major Canadian drug plan report published in recent years:
- 1–3% of plan members use specialty drugs, yet they account for 30–35%+ of total drug plan costs. (TELUS Health Drug Trends Report; Express Scripts Canada)
- The top 5% of claimants account for over 52% of total drug expenditures, with average annual costs exceeding $8,900 per person. (Express Scripts Canada)
- The average annual drug cost for the top 1% of claimants in private Canadian plans is more than $24,700.
- Private drug plan costs increased by 9.2% in 2023 due to the drug-mix effect alone—the highest increase on record. (Health Canada, Private Drug Plans Report 2018–2023)
These aren’t abstract statistics. They’re an important factor behind the renewal increases you’ve been seeing and will likely continue to see if nothing changes.
Specialty drugs—including biologics for inflammatory conditions such as rheumatoid arthritis and Crohn’s disease, oncology therapies, and treatments for rare diseases—represent fewer than 1% of all claims, but routinely constitute nearly one-third of total plan spending. And the pipeline of new, high-cost therapies continues to grow.
Inflammatory conditions alone accounted for more than 13% of all private drug plan spending in recent reporting years. Treatments for rheumatoid arthritis can cost tens of thousands of dollars annually. A single employee taking a biologic drug such as Humira, Enbrel, or Stelara can generate between $25,000 and $40,000 in annual claims.
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Why It Affects Every Employee
When specialty drug costs are absorbed into a standard group benefits plan without a strategy in place, the consequences extend across your entire workforce—affecting the overall benefits experience for employees.
Here’s what can happen when rising drug costs put pressure on a benefits plan:
- Annual drug maximums are reduced or capped, limiting coverage for all plan members.
- Reimbursement percentages are lowered from 90% or 100% to 80% or less.
- Dental, vision, and paramedical maximums are trimmed to offset rising drug costs.
- Deductibles and co-pays are introduced or increased, raising employees’ out-of-pocket expenses.
- Renewal rates become increasingly unpredictable, making long-term financial planning difficult.
- Smaller employers face the risk of becoming uninsurable or being placed into higher-risk pools.
Without the right plan design, a small number of very high-cost claims can account for a disproportionate share of drug spending. As a result, employers may feel pressure to increase premiums or reduce coverage elsewhere in the plan. So, how can employers manage these costs without compromising access to the medications employees need?
There’s also a longer-term impact on recruitment and retention. In a competitive labour market, benefits are an important differentiator. When employers are forced to reduce coverage to manage rising costs, they risk weakening their employee value proposition—often without realizing it until employees begin to notice or look elsewhere.
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What This Can Mean for Your Plan
If your plan currently covers all drugs without restriction, you could be just one or two new specialty drug claimants away from a 20–40% renewal increase. And unlike many other risks, the financial impact of high-cost specialty drugs continues to grow as new high-cost therapies enter the market.
A Smarter Way to Manage Drug Costs
If rising specialty drug costs are putting pressure on your benefits plan, it may be time to rethink how your plan is structured to fund these medications. Rather than absorbing every high-cost drug claim through the employer-sponsored plan, employers can consider a managed or restricted drug formulary as a way to help control costs while maintaining access to necessary medications.
A managed or restricted drug formulary is a defined list of medications covered under your group benefits plan. Certain high-cost medications may be excluded from the employer plan, with eligible employees directed to alternative sources of coverage, such as government programs or pharmaceutical manufacturer Patient Support Programs, to help ensure continued access to their medications.
Here’s how the strategy works:
Step 1: Build a Formulary That Helps Manage High-Cost Drug Costs
Working with your benefits broker, your plan is structured around a formulary that excludes select ultra-high-cost specialty drugs, like biologics and other therapies that routinely generate claims ranging from $25,000 to more than $150,000 per year. These are medications for which government programs already exist.
Step 2: Support Employees in Accessing Other Sources of Coverage
This is the piece that most plan sponsors don’t know about—and it changes everything.
Ontario’s Trillium Drug Program (TDP), which is administered by the Ministry of Health, covers more than 5,900 Ontario Drug Benefit (ODB)-listed medications, along with approximately 1,500 additional drugs through the Exceptional Access Program.
Employees whose households spend approximately 4% or more of their after-tax income on eligible prescription drugs may qualify for Trillium coverage. Once enrolled and after meeting their income-based deductible, they may pay as little as $2 per prescription.
For employees who qualify, Trillium can provide meaningful support toward eligible prescription drug costs, helping reduce the amount they may otherwise have to pay out of pocket.
Equally important, virtually every major manufacturer of brand-name specialty drugs in Canada offers a Patient Support Program (PSP). These programs provide services such as reimbursement navigation, co-pay assistance, and, in some cases, full coverage for patients who don’t qualify for public plans.
Research published in the Canadian Medical Association Journal found that more than 90% of manufacturer-sponsored patient support programs in Canada include financial assistance or reimbursement navigation. These programs exist because manufacturers recognize that not every patient has comprehensive private drug coverage.
Step 3: Use Savings to Strengthen Your Overall Benefits Plan
By removing high-cost drugs from your plan, your premiums become more stable. In many cases, they may even decrease. Those savings can then be reinvested into richer paramedical coverage, higher dental maximums, enhanced mental health benefits, or other plan design improvements that strengthen your benefits package while protecting it against future rate volatility.
The Result:
Employees who need high-cost medications can continue to access them—through Trillium or a manufacturer support program. Meanwhile, your plan has more room to maintain and strengthen the benefits that support your entire workforce.
The goal is to maintain access to necessary medications while creating a more stable and sustainable benefits plan for the entire workforce.
Preparing for What’s Ahead
The long-term impact of rising specialty drug costs is worth considering as employers plan for the future. Drug plan costs are structurally driven upward by inflation, with the drug-mix effect alone increasing costs by nearly 9.2% in 2023. As more specialty and gene therapies enter the market, the number of employees requiring ultra-high-cost medications will continue to grow.
Here’s what a proactive formulary strategy can deliver over a three-to-five-year period:
| Standard Drug Plan | Managed Drug Formulary |
|---|---|
| Unpredictable annual renewals with 15–30%+ increases possible | Stable, predictable renewal cycle based on controlled cost drivers |
| High-cost drug claims can create significant financial pressure on a plan | High-cost drug exposure is removed from the plan entirely |
| High-cost claims can put pressure on coverage across the plan | Employees enjoy richer coverage across all categories |
| Benefits erode over time as premiums absorb specialty claims | Savings are reinvested into dental, mental health, and paramedicals |
A managed formulary strategy isn’t a compromise—it’s a smarter approach to plan design.
Ontario employers who have implemented this strategy have seen:
- Renewal rates stabilize, or even decrease, within the first one to two plan years.
- The ability to restore or enhance benefits such as dental and paramedical coverage that had previously been reduced.
- Improved employee satisfaction because benefits become stronger and more sustainable, not weaker.
- Greater confidence in long-term financial planning for HR and finance leaders.
The Trillium Drug Program and manufacturer Patient Support Programs aren’t loopholes—they’re purpose-built safety nets designed to ensure employees with high-cost drug needs continue to receive the medications they require. Helping employees access these programs isn’t a reduction in care. It’s a smarter way to connect them with coverage that may be more comprehensive than what a traditional private plan can provide.
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Is Your Plan at Risk?
If your group benefits plan currently covers all drugs without restriction, you’re carrying a financial risk that grows with every new specialty drug that enters the market. The question isn’t whether your plan will eventually encounter a high-cost drug claim—it’s when.
At PROLINK, we help Ontario employers build group benefits plans that are strategically designed, financially sustainable, and built to support employees over the long term. A managed formulary strategy is one of the most effective tools available to help control drug costs while maintaining a competitive benefits program, yet many employers aren’t aware it’s an option.
Book a complimentary 30-minute consultation with our team. We’ll review your current plan, assess your exposure to high-cost drug claims, and show you what a managed formulary strategy could look like for your organization—including potential cost savings, opportunities to strengthen your benefits, and a clearer path to long-term sustainability.
Connect with us today!
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PROLINK’s blog posts are general in nature. They do not take into account your personal objectives or financial situation and are not a substitute for professional advice. The specific terms of your policy will always apply. We bear no responsibility for the accuracy, legality, or timeliness of any external content.