Employers Warned That PBM Reform May Not Lower Drug Costs

Paul Pruitt, Chief Growth Officer at SHARx, suggests that the current regulatory focus on rebates and contract disclosures often misses the broader financial picture. While the Federal Trade Commission has documented significant vertical integration—noting that the three largest PBMs generated over $7.3 billion in excess dispensing revenue between 2017 and 2022—reforming individual revenue streams does not necessarily force down total pharmacy spend.

Revenue frequently moves through affiliated entities, including specialty pharmacies, group purchasing organizations, and rebate aggregators. According to the FTC, affiliated pharmacies captured 68% of specialty-drug dispensing revenue in 2023, up from 54% seven years prior. Pruitt cautions that even with the Department of Labor’s proposed disclosure rules, employers must look beyond standard contract terms. He urges plan sponsors to demand full visibility into ownership relationships, subcontractor payments, and manufacturer compensation tied to formulary placement. Ultimately, the industry must decide if the traditional PBM model remains the most cost-effective path for high-cost medications or if alternative procurement strategies provide more predictable results for plan members.