On The Radar – 30th Edition
By
New PBM transparency and rebate rules may change how pharmacy middlemen generate revenue without necessarily reducing total employer pharmacy spend. As traditional revenue streams face greater scrutiny, vertically integrated organizations may shift revenue to affiliated specialty pharmacies, group purchasing organizations, and other entities.
➡ Why it matters: Employers need to evaluate the complete economics of their pharmacy arrangements, not assume regulatory reform alone will translate into lower costs.
The global biosimilars market is projected to nearly double from $37.39 billion in 2026 to $70.79 billion by 2036 as major biologics lose patent protection and provider adoption increases. Expansion into oncology and other high-cost categories could further increase their role in pharmacy cost management.
➡ Why it matters: Growing biosimilar competition could give employers another tool for managing specialty drug spend, provided plan design and contracting strategies encourage adoption.
Health insurance is providing less financial protection for some Americans as deductibles, prescription copays, out-of-network charges, and uncovered services continue to strain household budgets. A West Health and Gallup study found that only 49% of adults were considered “cost secure” in 2025.
➡ Why it matters: When insured employees still delay appointments or prescriptions because of cost, benefit design can affect both access to care and downstream healthcare spending.
Employer healthcare costs are projected to increase an average of 8.2%, with specialty medications, GLP-1 utilization, and medical inflation among the major drivers. Employers are responding with pharmacy carve-outs, tighter utilization management, self-funding, and greater scrutiny of vendor arrangements.
➡Why it matters: Continued cost growth is pushing employers to reconsider how their health plans are structured rather than relying solely on annual plan adjustments.
Increasing regulatory scrutiny is encouraging plan sponsors to look beyond rebates and spread pricing toward the complete economics of their pharmacy arrangements. Industry experts caution that eliminating one revenue stream may simply move revenue elsewhere within vertically integrated organizations.
➡Why it matters: Employers need end-to-end visibility to determine whether PBM changes are actually reducing total net pharmacy costs and improving medication access.
A proposal highlighted by Daily Kos argues that healthcare consolidation, administrative complexity, and middlemen contribute significantly to rising family healthcare costs. The proposed approach includes breaking up vertically integrated organizations, changing pricing rules, and addressing practices viewed by its advocates as anticompetitive.
➡Why it matters: Healthcare consolidation remains part of the broader affordability debate as policymakers and advocates consider how market structure influences employer and household costs.
A commentary in The Daily Record argues that practices such as patent thickets, evergreening, and continuation filings can delay generic and biosimilar competition. Critics contend that extending exclusivity through secondary patents contributes to higher prescription costs for patients and health plans.
➡ Why it matters: Delayed competition can extend the period employers pay higher prices for specialty medications before lower-cost alternatives reach the market.
The Consolidated Appropriations Act, 2026 introduces significant changes to PBM compensation and transparency, including full rebate pass-through requirements for ERISA plans and expanded reporting and audit rights. Beginning in January 2028, Medicare Part D also moves toward delinked service fees and away from spread-based compensation.
➡ Why it matters: Greater transparency gives plan sponsors more information, but it also increases their responsibility for evaluating PBM contracts, analyzing data, and overseeing pharmacy plan performance.
An Insurance Business article highlights potential conflicts created by PBM revenue arrangements and broker compensation structures. It argues that advisors should look beyond headline discounts and rebates to evaluate total net cost, site-of-care differences, clinical strategy, and vendor incentives.
➡ Why it matters: Employers increasingly need visibility not only into how PBMs are compensated, but also into whether the advisors helping select those vendors have incentives aligned with the plan.
Final Thoughts
Transparency remains a dominant theme, but this edition points to a bigger question: What happens after the numbers become visible? Employers are facing rising healthcare costs while PBM regulation, biosimilar competition, patent practices, and new fiduciary expectations reshape the pharmacy landscape.
Increasingly, the focus is moving beyond individual rebates, discounts, or fees toward total net pharmacy spend, incentive alignment, medication access, and measurable financial impact.
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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