Healthcare premiums are expected to jump another 9% in 2027. The cost of care is reaching a point where some are forgoing health insurance entirely. Health plans and employers are looking for a cost-relief valve wherever they can.
Earlier this year, Congress moved to lower pharmaceutical costs, passing the Consolidated Appropriations Act of 2026 (CAA of 2026). The bill included pharmacy benefit management (PBM) reforms that would add greater transparency to the process these organizations use to price prescription medications. The legislation mandates that PBMs submit detailed semi-annual reports to employers about their rebate prices and overall spending. This has largely been celebrated as a major win for the healthcare industry. For employers, it’s a wait-and-see game, as its impacts won’t be felt until 2027.
Ahead of the CAA of 2026 and due to settlements with the Federal Trade Commission, PBMs are shifting how they manage their revenue. Some are telling their investors directly that, despite added regulation, they expect revenue to remain the same. PBMs are doing this by restructuring how revenue is captured and keeping it within their own ecosystem under a different label. This undercuts the transparency the legislation aimed to create—before it has even taken effect.
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This means employers are trying to comparison shop in a market where all the price tags are hidden. And most can’t simply switch PBMs to find better pricing for their members. They face two structural challenges:
● Contractual hurdles: Most PBM contracts require lengthy notice periods for termination. Larger employers with custom contract terms often face notice requirements of up to 12 months. In practice, that means the decision to leave must be made before most employers have even begun evaluating alternatives. And leaving a contract early means an employer who received a rebate reconciliation payment or a performance bonus may be required to return it upon early termination, essentially penalizing them for exercising their right to change vendors. Rebate reconciliation timing creates an additional financial exposure. Most PBM contracts include a rebate reconciliation period of 12 to 18 months following contract termination, during which the PBM retains the right to adjust previously reported rebate figures.
● Data blockades: Upon termination of a PBM contract, employers are entitled to their claims data, but the timeline, format, and completeness of that data transfer are frequently governed by contract language that favors PBMs. Common tactics include:
○ Requiring expensive translation of proprietary data before a new PBM can intake it, potentially creating months-long implementation delays.
○ Charging data extraction fees that are not disclosed until termination is initiated, sometimes running into tens of thousands of dollars for larger plan populations.
○ Delaying the transfer of member eligibility files and prior authorization histories, which creates coverage gaps and member disruption at the moment of transition. For example, say a member is mid-therapy on a specialty drug with an active prior authorization; that authorization does not automatically transfer to the new PBM. The incoming PBM must re-adjudicate it, and during that window the member may face a coverage interruption.
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Switching PBMs is inherently disruptive, time-consuming, and designed to create transition friction. However, there are times when finding a better-fit PBM outweighs the roadblocks. If that time comes, here are five key areas employers should consider to lower costs for their members:
● A strong foundation: Choose a PBM that employs rigorous clinical management, prior authorization, and formulary management practices. These are the primary mechanisms through which a PBM controls drug mix, ensures clinical appropriateness, and prevents unnecessary spend.
● Specialty drug management: This is often the highest-yield starting point. Strategies including specialty PBM carve-outs, site-of-care optimization, and alternative funding programs can reduce specialty spend by 25% to 40% in some categories, based on documented employer case results.
● GLP-1 management: Obesity-related GLP-1 clinical management programs that pair pharmacist coaching with behavioral support have shown reductions in ongoing GLP-1 utilization while preserving outcomes. Poorly structured programs may only shift costs rather than reducing them.
● Biosimilar-first policies: Employers should check their PBM contract for any biosimilar-first policies that may be in place for applicable drug categories. In many incumbent PBM formularies, branded biologics remain preferred due to rebate economics, even when a biosimilar is clinically equivalent and significantly less expensive.
● Transparency rules: Transparency requirements from the CAA of 2026 will compel greater fee disclosure, and employers who understand what those disclosures mean will be better positioned to act on them. The challenge is that most employers are not currently equipped to interpret what they see. That is where independent pharmacy advisors and employer-based coalition models can play a significant role.
While momentum is growing to enact more transparency across the healthcare industry and more specifically within the PBM space, the current disclosure rules still fall short of what employers need to lower costs. True transparency means employers can see every dollar that flows through their PBM: where it originates, who retains it, and on what basis. That means:
● Rebates are passed through in full and disclosed at the claim level
● A PBM’s specialty pharmacy is not receiving preferential routing that generates undisclosed margins
● Administrative fees are itemized and auditable
● Formulary decisions can be traced to clinical rationale rather than manufacturer economics
Healthcare continues to become more expensive, but employers don’t have to be passive participants. Even in an opaque PBM landscape, they can demand greater accountability and make more informed decisions that lower costs and improve care.
Photo: OsakaWayne Studios, Getty Images
With over 20 years of experience in the PBM space, Christine Johnston
is an accomplished pharmacy benefit leader and consultant with a demonstrated history of managing costs and improving processes for plan sponsors. She is the General Manager of MacroHealth's Pharmacy Solutions Marketplace and was previously the co-founder and president of Foundational Pharmacy Strategies, which was recently acquired by MacroHealth. Prior to that, Christine led a small pass-through PBM. Christine is dedicated to lowering the overall cost of care to ensure individuals do not face difficult trade-offs between essential needs and necessary medications.
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