On The Radar – 16th Edition
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A growing chorus of critics argues that drug prices often have little connection to actual development costs. Industry spending frequently leans more heavily toward marketing, administration, and shareholder returns than toward research itself. Meanwhile, Americans continue to pay significantly more for the same medications than patients in other developed countries.
➡ Why it matters: Without transparency around pricing and development costs, the gap between drug value and drug price will remain a central pressure point in the healthcare system.
Major federal reforms passed in 2026 are reshaping how pharmacy benefits are administered. The new rules require PBMs to pass through 100% of manufacturer rebates to employer plans and prohibit spread pricing, while granting sponsors expanded audit rights.
➡ Why it matters: Employers now have both the authority and responsibility to actively oversee pharmacy benefit arrangements.
Contrary to popular belief, Americans do not use dramatically more healthcare services than other countries. The primary driver of the nation’s spending gap is price. Services, medications, and administrative costs simply cost far more in the U.S.
➡ Why it matters: Cost containment strategies that rely solely on reducing utilization miss the real problem: the underlying price structure.
The arbitration system designed to resolve surprise billing disputes is proving far more expensive and time-consuming than anticipated. Providers are winning roughly 80% of disputes, often leading to higher reimbursements than insurers initially offered.
➡ Why it matters: Instead of lowering costs, the arbitration process may be pushing reimbursement levels higher for employer plans.
Point-of-sale rebates are gaining traction as employers move away from traditional rebate structures that delay savings until year-end. By applying discounts at the pharmacy counter, employees receive immediate relief rather than indirect plan-level rebates.
➡ Why it matters: Transparency at the point of purchase helps align incentives and improves medication affordability for workers.
New federal requirements mandate semiannual reporting on drug-level spending, PBM fees, and pricing spreads. Plan sponsors now have access to far more granular data than ever before.
➡ Why it matters: With more visibility comes greater fiduciary responsibility for employers overseeing pharmacy benefits.
A new outlook report projects employer healthcare costs will rise roughly 10% in 2026, driven by chronic disease, high-cost claims, and specialty medications like GLP-1s and gene therapies.
➡Why it matters: Prescription drug spending is increasingly the largest and fastest-growing cost driver for employer health plans.
As ERISA lawsuits increase, third-party administrators are playing a more strategic role in helping plan sponsors demonstrate fiduciary diligence. Proper documentation, transparent data reporting, and strict adherence to plan procedures can prevent costly legal exposure.
➡Why it matters: Administrative oversight is now a core component of fiduciary risk management.
Some policymakers argue that many medications should move from prescription-only status to over-the-counter availability. Advocates believe this shift would introduce price competition and reduce reliance on insurance reimbursement systems.
➡Why it matters: Expanding OTC access could reshape how certain medications are priced and distributed.
Direct-to-consumer pharmaceutical advertising has exploded to over $9 billion annually, with the U.S. remaining one of only two countries that allow the practice. Critics argue these campaigns drive demand for expensive brand-name drugs even when lower-cost alternatives exist.
➡ Why it matters: Advertising-driven demand can significantly influence prescribing patterns and healthcare spending.
The Department of Labor has proposed new rules requiring PBMs to disclose all forms of compensation to employer plans, including rebates, spread pricing profits, and indirect payments.
➡ Why it matters: These disclosure rules could significantly reshape PBM contracts and strengthen employer oversight of pharmacy spending.
Final Thoughts
Pharmacy transparency is rapidly moving from policy discussion to operational reality. New laws, disclosure rules, and fiduciary expectations are reshaping how employers must manage pharmacy benefits. Those who actively govern their pharmacy strategy will be far better positioned than those who continue to treat it as a black box.
We’ll be back in two weeks with more news you need to know. If you’d like a custom analysis or want to explore SHARx program options for your clients, contact us!
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