Pharmaceutical breakthroughs have transformed the way doctors treat everything from chronic conditions to rare diseases.
Once untreatable diagnoses now come with renewed hope, thanks to an expanding arsenal of powerful new medications. But these advances come at a significant cost that is today reflected in Bermuda’s health insurance claims.
Peter Lozier, Group Head of Benefits at BF&M and Argus, said the rising cost of prescription drugs — particularly high-cost specialty treatments — has become one of the most significant drivers of health insurance claims increases, globally and locally.
While these medications often reduce hospital admissions and improve long-term patient health, their soaring costs are reshaping the economics of healthcare.
In addition to drug prices, BF&M and Argus, who merged in January this year, face cost pressures across their international member base related to currency fluctuations, cross-border pharmacy pricing, and the lack of unified drug purchasing power in some markets.
“We’ve seen notable increases in claims tied to biologics, oncology therapies, gene treatments, and chronic disease medications, many of which are life-changing but come at a very high price,” Mr Lozier said.
“For example, a single course of treatment for some rare diseases can exceed $1 million, and even routinely prescribed drugs for common conditions like diabetes or autoimmune diseases now contribute significantly to total spend.”
Game-changing medicine – but at a cost
In recent years, the GLP-1 family of drugs — used to treat diabetes and obesity — have been widely prescribed, now accounting for nearly 20 per cent of total prescription drug costs, Mr Lozier said.
“At BF&M and Argus, we provide coverage for GLP-1 medications — such as Ozempic, Wegovy, and Mounjaro – when they are prescribed for their approved ‘on-label’ uses,” Mr Lozier said. “There are GPL-1s designated for weight loss that are covered, provided a member is eligible.”
“On-label” use means prescribing a medication exactly as described on its official product label — for the right condition, patient group, dosage, and duration.
The monthly cost for Ozempic in Bermuda ranges from $936 to $1,200, significantly higher than in regulated markets such as Germany ($103) or France ($83). Mr Lozier noted that for the health insurance plan of a business with 100 employees, this could translate into approximately $90,000 annually in claims related to GLP-1 drugs alone.
Research has shown 13 per cent of Bermuda’s population has diabetes, and three out of four are overweight or obese — statistics that make clear the huge potential for GLP-1 drugs to make a positive impact, though at a high cost.
Other specialist drugs, such as oral cancer therapies and treatments for autoimmune diseases like rheumatoid arthritis, are also driving healthcare inflation in Bermuda.
“Oral oncology drugs, for instance, have transformed cancer treatment by allowing patients to receive care outside the hospital,” Mr Lozier said. “However, these therapies often cost $10,000 to $20,000 per month, and patients may be on them for extended periods.
“The convenience and efficacy are undeniable, but the cumulative financial impact on the plan is substantial — particularly as these drugs are often prescribed alongside other expensive diagnostics or infusions.
“Similarly, drugs used to treat rheumatoid arthritis, Crohn’s disease, and psoriasis — typically biologic therapies such as adalimumab, infliximab, or newer JAK inhibitors — can each cost $3,000 to $6,000 per month or more. These are long-term, maintenance therapies, which means the financial exposure is not just high cost, but also ongoing.”
An eye on the US
In the United States, where prescription drug prices are among the highest in the world, the government is trying to force pharmaceutical companies to bring down prices. Could this have any knock-on cost benefits for Bermuda?
“These US price controls primarily apply to federal programmes, such as Medicare and Medicaid, and do not extend to private insurers or international purchasers, who typically pay higher commercial rates,” Mr Lozier said.
“In fact, there’s a concern that pharmaceutical manufacturers may attempt to offset revenue losses in the US public sector by maintaining or even increasing prices in unregulated or smaller markets like Bermuda.
“That said, there could be some indirect benefits over time. As US policy continues to apply downward pressure on pricing — and as more biosimilars and generics enter the market — we may see a moderation in list prices across the board.
“This could help BF&M and Argus and other insurers negotiate better rates with US-based pharmacy suppliers and distributors.”
Bidding for a better deal in Bermuda
To manage the trend of rising drug costs, BF&M and Argus are continuing to develop clinical oversight programmes, formulary strategies, and a preferred specialty pharmacy network.
The latter involves partnering with select pharmacies that offer competitive pricing, greater transparency, and enhanced patient services, with the aim of improving affordability and ensuring quality dispensing of these critical drugs.
The merger of the two insurers also has potential for getting Bermuda a better deal.
“One of the key strategic benefits of combining BF&M and Argus is greater scale and bargaining power, which is especially important when it comes to negotiating with pharmaceutical suppliers and pharmacy benefit managers,” Mr Lozier said.
“Individually, Bermuda’s insurers operate in a small market with limited leverage. But together, we cover a much larger combined membership base, both locally and across multiple jurisdictions.”
He added that the resulting scale efficiencies allow BF&M and Argus to pursue better volume-based discounts on high-cost and specialty medications; preferred pricing arrangements through consolidated pharmacy contracts; and more competitive formulary design that encourages cost-effective prescribing.
Other strategies Mr Lozier suggested to help Bermuda keep drugs costs down include promoting greater use of generics and biosimilars (where clinically appropriate) and encouraging data-driven prescribing through provider education and clinical guidelines.
He also recommended enhancing medication adherence and case management programmes to reduce avoidable costs from poor disease control, and exploring policy reforms that support price transparency and efficient use of limited formularies.
“We believe the solution lies in better alignment between cost, value, and outcomes — so that members get the care they need without unsustainable strain on the health plan,” Mr Lozier said.
