Report: Drug Expenses Driving Increase in Employer Health Care Costs

November 14, 2025

Employers’ health care costs could skyrocket 9 percent next year, which would represent the biggest annual increase in more than a decade, according to a new survey by the Business Group on Health (BGH).

Much of the growth in cost can be attributed to rising pharmacy spending, as well as chronic and complex conditions, such as cancer. Employers expect to lower the cost increase to 7.6 percent through plan-design changes.

Here are some key takeaways:

High drug costs:  Weight loss drugs classified as GLP-1s cost as much as $1,000 a month. The drugs, which include Wegovy, Zepbound and Mounjaro, have contributed to pharmacy increases and have left employers weighing whether the drugs are something they should cover.

Cancer diagnoses rising:  Studies showed that cancer was at the top of the list of conditions driving costs in 2025. This was due to the growing frequency of cancer diagnoses and the rising cost of treatment, BGH found. Cancer was followed by musculoskeletal and cardiovascular conditions.

Cause for alarm:  Experts are expressing concern that gaps in preventative care and screenings—remnants of the COVID-19 pandemic—mean fewer opportunities to treat serious health needs early.

Now what?:  Half of large employers said they’re likely or very likely to shift more costs onto employees next year, whether through increasing premiums, deductibles, or out-of-pocket maximums, according to a July survey from Mercer.

Read the report online.