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Comptroller and health directors flag rising pharmacy costs and GLP‑1 drugs as a major fiscal pressure
Summary
The state’s comptroller and health benefits staff told lawmakers that sharp growth in GLP‑1 prescriptions, specialty biologics and weakening rebate rates are a key driver of deficit pressures across state retiree plans, active‑employee health plans and Medicaid.
State fiscal managers and the comptroller’s office told the Appropriations Committee that pharmacy costs are a cross‑cutting driver of multiple agency shortfalls, and that recent changes in drug use and pricing are creating budget uncertainty.
Comptroller’s overview: Tara Downs, the deputy comptroller, described several lines of deficiency work the office handles and introduced the agency’s witnesses. The comptroller’s health and benefits staff described 2 primary pharmacy-related pressures: rapid uptake of GLP‑1 medications (used for diabetes and recently for weight management) and an increase in specialty and high‑cost biologic drugs.
“Last fiscal year we spent about $40,000,000 on GLP‑1s. This fiscal year we expect to spend around $65,000,000,” a witness said, describing a roughly 50 percent increase in that single prescription class. Comptroller staff explained that while some pharmacy contracts include dollar‑for‑dollar guarantees above certain spending thresholds (in the state’s case, with CVS), the underlying trend of higher utilization and the decline in rebate rates increases the program’s net cost.
PBM and contracting changes: OMB and agency witnesses said they are reconfiguring PBM contracts to align incentives with the state. Historically, formularies were designed to maximize list‑price rebates; new contracting aims to prioritize net cost and clinical value. One executive said the state is “actively … making adjustments” to formularies and seeking PBM recommendations to prefer higher‑value, lower‑cost drugs when clinically appropriate.
Why it matters: Pharmacy and retiree health costs affect both general‑fund liabilities (retiree health and state employee plans) and Medicaid. For large programs, small percentage shifts in rebates or drug mix translate into multi‑million‑dollar changes in required appropriations. Comptroller staff said they are going to tighter procurement clauses, adjust prior authorization and utilization-management rules, and seek market bids for Medicare Advantage retiree plans to manage premiums.
Ending: Committee members pressed for clearer near‑term forecasts; the comptroller’s office and agencies said they will provide updated monthly letters and suggested further legislative discussion on long‑term policy levers.
