Today in Apex:
Leading: KFF’s annual look at employer-sponsored insurance shows premiums and deductibles are at record highs
Looking: Can a new startup help employers get cash-pay prices via a “pharm-to-conference-table” approach?
Surfacing: Fancy Band-Aids known as skin substitutes -- and lobbying around skin substitutes -- are part of the reason we can’t have nice things
INFLECTION POINT/ KFF Data Says Commercial Premiums Are Up 6%, With Businesses Paying $20,000 and Families Chipping in $7,000
This is the most important chart in all of U.S. health policy. It was released this morning, as part of KFF’s annual Employer Health Benefits Survey.
It shows the ceaseless growth of premiums over the years, both in terms of what employers must pay -- $20,143 a year, per employee, the first time the $20,000/year mark has been breached -- as well as what employees are paying out of their pocket. The New York Times coverage (🎁) hits that point well.
(As a reminder, the KFF data is specific to employer coverage.)
There’s a huge amount of other useful detail in the 226-page report showing:
Deductibles hit an all-time high.
Not coincidentally, the number of Americans in a high-deductible plan also spiked after a decade of relative stability.
Obesity-drug coverage expanded at large employers and shrunk at small employers
On Friday, I’ll post the most illuminating visualizations from the report.
But for now, it’s worth sitting for a moment and contemplating the overall trend, which will accelerate in 2026 if projections are correct. The average family needs to pay nearly $7,000 out of pocket in premiums alone for a plan with an ever-increasing deductible. The average employer is shelling out $20,000 to insure that family, double what they would have paid 15 years ago.
Yes, there has always been grumbling about health costs -- and health insurance costs -- but it feels like we’re nearing a tipping point where radical solutions become inevitable.
Maybe we’ve already passed that tipping point.
THE ARC/ Andel Launches With a Bold Plan to Bring Cash-Pay Prices to Employer Benefits
The most interesting part of the trend toward “pharm-to-table” solutions that bring cash-pay prices directly to patients is not actually the prospect of patients suddenly flocking to drugmakers to pay out of pocket for meds.
It’s the creation of a drug-supply ecosystem -- one built on transparent pricing -- that lives outside of the PBM structure that would allow for different ways of paying for meds.
The most interesting application of this new structure is the prospect that employers themselves might choose to access those prices on behalf of their employees, offering a way to deliver a customized and flexible benefit for meds that don’t fit well into the existing insurance system.
Novartis teased that idea a month ago, noting that they were “exploring a direct-to-business model.” That’s the kind of thinking that both gets people excited and generates of pushback on how “direct-to-business” scales. The counter-argument leans heavily on the idea that businesses aren’t going to want to set up systems with every drug manufacturer.
But to be dismissive of the idea to undersell both the demand for a direct-to-business approach and the creativity that might go into solving this problem.
That’s why this press release on the launch of Andel, “a revolutionary new platform that strengthens pharmacy benefits by giving employers an affordable way to include GLP-1s,” caught my eye.
In a nutshell, the Andel concept -- call it “pharm-to-conference-table” -- is that the company would buy meds directly from manufacturers at cash-pay prices and create a multi-company marketplace where employers could make those meds available to their employees outside of the employer’s existing benefit.
Employers could then adjust how they would make those benefits available, adjusting cost-sharing based on anything from an employee’s position at the company to their adherence.
I don’t want to oversell this one approach -- Andel is launching with a modest $4.5 million funding round -- but it’s an idea that has a lot of traction. Andel’s launch generated a long think piece in STAT and a writeup in Inc. That's a lot more attention your typical startup gets, and it’s a reflection of the hunger for solutions.
It’s clear that we’re about to enter a “let a hundred flowers bloom” period when it comes to streamlining the supply chain. Some of these efforts will succeed. Some won’t.
But I’ll be rooting for all of them.
QUICK TURNS/ Lobbying For the $13 Billion Skin Substitute Industry, and the Intersection Between Tariffs and International Drug Prices
I like to make the argument that if we were more thoughtful about how we spend our health care dollar, a lot of “hard” problems get easier.
For instance, there is concern that we can’t “afford” to cover obesity medicines in Medicare because of the cost. And yet Medicare spends $13 billion on “skin substitutes” -- sometimes derided as fancy Band-Aids -- every year.
Why do we spend so much? I suspect that, in part, it’s because the executives behind skin substitutes spend a ton on lobbying and are funding Trump’s ballroom, as this great Washington Post post makes clear.
ELSEWHERE:
The Trump administration is readying a new tariff push, this one designed to force other countries to pay more for prescription drugs. The Financial Times, which broke the story, doesn’t have a lot of details on how this would all work, but it sounds like more uncertainty is coming, regardless.
I have little patience for the common argument that there are magic policy solutions in which drug spending can be cut massively without some sort of impact on innovation. Calling for more price regulation requires accepting the natural consequence of fewer new drugs. And while that’s not the side of the debate that I would choose, it’s an intellectually honest one, which makes this Nature piece on the need to trade innovation for lower prices a worthwhile read.
Gilead will not change the price it charges state AIDS Drug Assistance Programs for HIV medicines, per STAT. That marks a retreat of sorts for Gilead, which had earlier pressed for a modest price increase for the programs.
Cost Curve is produced by Reid Strategic, a consultancy that helps companies and organizations in life sciences communicate more clearly and more loudly about issues of value, access, and pricing. We offer a range of services, from strategic planning to tactical execution, designed to shatter the complexity that hampers constructive conversations.
To learn more about how Reid Strategic can help you, email Brian Reid at [email protected].
