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Board hears Aon briefing on GLP‑1 costs, biosimilars and PBM risks
Summary
Aon presented pharmacy benefit trends to the Health Service Board, highlighting rapid growth in GLP‑1 medications that is driving plan costs, potential near-term savings from biosimilars for biologics, and ongoing scrutiny of large PBMs by federal regulators.
The San Francisco Health Service Board heard an extensive briefing from Aon on pharmacy benefit trends, including clinical changes, cost drivers, PBM market structure and pending legislation.
Kelvin Richards, a pharmacist and Aon vice president, told the board that GLP‑1 medications—used for diabetes and increasingly for weight loss—have driven substantial recent spending increases. "Diabetes and obesity impact more than 50 percent of individuals in The United States and we expect these drugs to be continued to be heavily utilized," Richards said, noting examples such as Ozempic, Mounjaro and Zepbound and new oral therapies in development.
Richards summarized plan design options and trade-offs: unrestricted coverage quickly raises costs, while strict exclusions can preserve plan solvency but limit access to effective therapies. He said many plans are pursuing restrictions or prior‑authorization approaches and that there is no single "perfect solution." "There is not one perfect solution," he said.
On biologics, Richards described biosimilars (for example, Humira) as a promising source of near‑term savings. He said mandatory formulary moves by large PBMs led to rapid biosimilar uptake and estimated 40–60 percent price reductions off list for some products as competition increases.
The presentation also covered the PBM industry structure and federal scrutiny. Richards noted the "big three" PBMs (CVS, Express Scripts, Optum) handle the majority of prescriptions and that the FTC has pursued enforcement and issued reports about vertical integration and pricing. He flagged audit findings that plan oversight can recover meaningful errors and that PBM arrangements warrant active monitoring.
Board members thanked Aon for the briefing and emphasized the fiscal challenge of balancing clinical advances with plan affordability. Several board members said they expect SFHSS staff and Aon to return with specific plan design options and cost projections to manage GLP‑1 utilization going forward.
