Employers Beware: Alternative Funding Programs Require Careful Review to Avoid Negative Consequences

As healthcare costs increase, employers and other plan sponsors continue to explore strategies to better manage pharmaceutical costs. Given that prescription drug spending accounts for 18% of all healthcare spending,

such strategies focus on the specialty medications that account for a significant share of that spending. One approach is the use of alternative funding programs (AFPs). AFPs have been gaining traction with employers by marketing strategies that shift the entire financial burden of high-cost specialty medications away from the employer, primarily by directing covered employees to manufacturers’ patient assistance programs (PAPs). This practice comes with risks.