The High Cost of Loyalty: Looking Beyond the Rebates

For the third consecutive year, a prospective employer group has opted to decline SHARx, despite a detailed analysis demonstrating significant cost-reduction opportunities. This decision highlights a recurring industry challenge: the “Big Three” PBMs continue to entice groups with the promise of larger rebate checks, which often distracts from the more impactful goal of lowering the actual cost of care. By prioritizing these back-end refunds over sustainable savings, organizations remain stuck in a cycle of managing rebates rather than solving the underlying problem of high drug spend.

Unfortunately, this story is not unique. 

Many employers continue to place blind faith in legacy PBMs based on promised pass-through rebates and projected refunds. But what is often left out of the conversation is the inherent uncertainty and opaqueness of these rebate structures. According to the FTC’s 2023 interim staff report, “Pharmacy Benefit Managers: The Powerful Middlemen Inflating Drug Costs”, major PBMs routinely obscure pricing data and rebate practices, prioritizing profits over transparency or patient access. 

The Problem with the Rebate Game

PBMs present their rebate structures as a cost-containment strategy, but in reality, they are often a shell game. While employers may receive a refund on the backend, those dollars come after inflated costs have already hit the plan. Meanwhile, PBMs profit from spread pricing, rebate retention, and exclusive formulary positioning that keeps low-cost alternatives off the table. 

Even when PBMs offer “pass-through” rebates, they are under no obligation to disclose the full scope of manufacturer payments, nor are they incentivized to prioritize the lowest-cost medication. As the FTC report notes, PBMs frequently steer patients toward higher-cost drugs because the rebates they collect are based on the drug’s list price, not its value or efficacy.  

Fiduciary Risk: It’s Not Just About Discounts

For plan sponsors, the implications go beyond the balance sheet. There is growing legal pressure to demonstrate fiduciary responsibility in managing health benefits. In recent years, companies like Johnson & Johnson and Honeywell have come under scrutiny for excessive health plan spending that could violate ERISA standards. And the 2023 Wells Fargo lawsuit further illustrates that employers who fail to manage prescription costs responsibly may be held liable for breaching their fiduciary duties. 

Choosing not to evaluate solutions outside of the Big Three PBMs is no longer just a missed opportunity—it’s a potential legal exposure. 

The Opportunity Cost of Inaction

By sticking with the status quo, decision-makers are not just overpaying for medications; they are throwing away the opportunity to reinvest in what matters most: their people. 

Every unnecessary dollar paid to a PBM is a dollar that could have gone toward better benefits, higher wages, or professional development programs. When SHARx identifies cost reduction opportunities of $1,500 per employee per year, that is not theoretical. It is a real chance to redirect waste into programs that drive employee satisfaction, retention, and growth. 

The uncomfortable truth is this: when leaders ignore the well-documented issues with legacy PBMs and fail to act, they become complicit in perpetuating the very inefficiencies they say they want to solve. 

Time to Look Beyond the Big Three

Employers have a duty—financial, ethical, and legal—to explore all viable options for managing prescription costs. The rebate promises from legacy PBMs may sound attractive, but they are often based on a model designed to enrich middlemen, not protect employees or plan sponsors. 

If you haven’t conducted an independent analysis of your pharmacy benefits, now is the time. Waiting another year only compounds the waste and delays the chance to reinvest in your workforce. At SHARx, we believe prescription benefits should serve employees first, not the bottom line of a massive PBM. 

Don’t settle for rebates. Choose reinvestment. Choose responsibility.