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The pharmacy benefit landscape is in the midst of rapid change, making it increasingly difficult for plan sponsors to track, understand, and evaluate developments. To help cut through the complexity, National CooperativeRx has highlighted several key developments plan sponsors should be aware of, along with their potential benefits, drawbacks, and considerations.
Rebate Shifts and Alternative PBM Arrangements
Lower list price/lower rebate strategies from manufacturers, utilization trends, and increasing pressure around transparency are among the industry dynamics contributing to shifts in pharmacy benefit management (PBM) approaches.
More PBMs are shifting away from traditional rebate- and volume-based pricing models. Instead, they are adopting approaches that rely more on fee-based structures or emphasize standalone drug discount performance and alignment between rebate payments and actual performance.
Potential Benefits:
- Greater clarity into drug costs
- Better alignment of drug spend with contract performance rather than over/underperformance
- Rebate payments more closely aligned with plan utilization
- Capturing rebate value at point-of-sale rather than several months later
Potential Drawbacks:
- Rebate payments may decrease and become more volatile
- May be more difficult to audit
- New or increased fees may be charged by PBMs
- Patient and plan cost share may shift
- Risk of discount and rebate underperformance, shifts from PBM to plan sponsors
- Lack of awareness of evolving pricing and rebate models may complicate evaluation
- PBM value comparisons may be unreliable, and decisions may be based on inaccurate analysis
Considerations:
- Develop a basic understanding of alternative pricing and rebate models (e.g., spread vs. pass-through and channel-level rebate vs. drug-level)
- Determine plan needs and priorities, then assess potential tradeoffs between models
- Evaluate financial impact and predictability when assessing alternative models
- Ensure accurate modeling in repricing analyses based on pricing and rebate approaches; the value of list price changes needs to be calculated to make fair comparisons across PBMs
Direct-to-Consumer and Cash-Pay Purchasing Portals
Direct-to-consumer (DTC) programs continue to expand across manufacturers and therapeutic classes. These programs allow patients to purchase medications directly online, bypassing traditional distribution channels, including pharmacies, PBMs, and health plans.
Cash-pay drug purchasing portals are also directing patients to prescription drugs offered by participating pharmaceutical manufacturers. Discounts can vary significantly by product, formulation, and dispensing channel. These programs primarily target uninsured individuals, patients enrolled in high-deductible health plans, and consumers willing to pay out of pocket for medications that may not be covered by insurance, such as certain weight-loss therapies.
Potential Benefits:
- DTC discounts are often between 40% and 85% off list prices
- Creates a public “reference price” for drugs
- Better understanding of true net cost of drug
- Potentially lower prices for uninsured patients
Potential Drawbacks:
- Upfront costs are often comparable to the net-of-rebate costs seen in commercial plans
- No claim = no rebate; may result in higher net costs to plan sponsor
- Payments usually do not count toward deductibles/OOP max
- Extra fees or subscriptions for services
- Limited provider coordination; gaps in monitoring
- Easier access to products may increase inappropriate use
- Risk of side effects for patients without clinical oversight
- Some programs may prioritize sales over clinical appropriateness; possible steering to favorable prescribers or vendors
Considerations:
- Encourage plan participants to consult their doctor or pharmacist about the clinical appropriateness of products available through DTC programs
- Understand broader plan implications, including lost rebates and cost-sharing impacts, before promoting DTC programs
Federal and State Regulations and Fiduciary Duty Obligations
Federal and state legislative activity related to pharmacy benefit management and prescription drug pricing remains active. At the federal level, the Consolidated Appropriations Act of 2026, a proposed rule from the U.S. Department of Labor, and a Federal Trade Commission settlement have introduced new requirements affecting PBMs. Collectively, these measures aim to promote transparency and disclosure from PBMs to employer-sponsored health plans about the services they provide and all the revenue they receive.
Additionally, the Trump Administration has issued an executive order, “Lowering Drug Prices by Once Again Putting Americans First,” which directs the Secretary of Labor to propose regulations to improve the disclosure of PBM compensation, as well as the fees paid to brokers and consultants by PBMs.
At the state legislative level, all 50 states have passed some form of PBM legislation, with additional proposals pending. Enacted and proposed legislation spans a wide range of regulatory areas, from pricing methodology and patient out-of-pocket costs, to requiring PBM fee disclosures and prohibiting shared ownership of PBMs, pharmacies, and insurers.
The volume and direction of federal and state activity send a clear message — PBMs must become more transparent about how they operate and how they are compensated. For plan sponsors, this reinforces the growing expectation they offer a pharmacy benefit arrangement that fulfills ERISA fiduciary duty obligations.
Potential Benefits:
- Greater visibility into drug pricing and PBM practices
- Increased scrutiny of hidden commissions and fees
- Potential for greater support in helping plans understand and navigate their benefits
- Lower list prices and reduced reliance on rebates
- Federal reform may temper state activity, which has been more negative for plan sponsors
Potential Drawbacks:
- Several state PBM reforms increase plan costs
- Most policies focus on patient cost, not plan cost
- Plan sponsors are taking on more reporting requirements and financial risk
- Some federal changes could shift costs from Medicare/Medicaid to the commercial market
- Regulatory burden likely to impact smaller PBMs more
Considerations:
- Assess PBM arrangements for fee disclosures, transparency into PBM revenue streams, and rebate pass-through
- Take prudent steps to select trustworthy service providers who offer cost-effective services with clear value and reasonable fees
- Ensure compliance with fiduciary obligations under ERISA and maintain supporting documentation
- Stay current on legislative and regulatory changes via trusted advisors, legal counsel, and credible sources
Supporting Plan Sponsors in Navigating the Industry
The pharmacy benefit landscape continues to grow more complex, with ongoing developments that require careful understanding and attention. National CooperativeRx remains committed to helping our members and partners navigate this evolving environment and make informed decisions about their pharmacy benefit offerings.
Whether you would like to become more educated on industry trends, have questions about evaluating PBM arrangements, or would like access to our Demonstrating Fiduciary Duty Compliance document, we are here to support you.
