Patients Should Not Have to Wait Until 2028 for Accountability

 Prescription drug prices keep rising, driven in part by a system in which pharmacy benefit managers (PBMs) sit at the center—controlling which drugs are covered, what pharmacies are paid, and what patients ultimately spend. Yet their profits are tied to higher prices, not lower ones, creating a system where the middleman benefits when costs rise. As long as those incentives remain hidden, patients are left paying the bill with no way to challenge it. Bringing transparency to PBM pricing and compensation is the first step to exposing these misaligned incentives and forcing the market to work in favor of patients rather than PBMs. Congress has taken steps in that direction, but the reforms will not go into effect until 2028, leaving state legislatures as patients’ hope for transparency in the meantime.

PBMs profit from high-priced drugs that offer rebates. Instead of passing those rebates on to patients, PBMs retain some or all of them, leaving patients paying more than they would for a generic alternative. In turn, brand-name manufacturers are incentivized to raise both prices and rebates, increasing what PBMs can capture at the patient’s expense.

Although PBMs are supposed to favor lower-cost generics and biosimilars, they often earn more from rebates than from serving patients. By prioritizing brand-name drugs over lower cost alternatives, PBMs create more opportunities to generate rebate-driven revenue.

PBMs also drive up costs for insurers and pharmacies—costs that are ultimately passed on to patients—by charging insurers more than they reimburse pharmacies, a practice known as spread pricing. This inflates insurance premiums while simultaneously reducing pharmacy revenue, fueling ongoing battles in state legislatures.

Spread pricing is one of several PBM practices pharmacies blame for the growing number of closures that reduce patient access to care. Between 2010 and 2021 nearly one-third of retail pharmacies closed. PBMs reimburse pharmacies for the medicines they dispense to patients. However, independent pharmacies are reimbursed at lower rates than PBM-affiliated pharmacies for generics and are often hit with excessive fees months after the PBM reimbursed them for a prescription, often leaving the pharmacy at a loss for the prescription.

PBMs have been able operate this way because they function in an opaque market where insurers, pharmacies, employers, and patients are disconnected from the true price of medicine. That can be changed by requiring PBMs to report pass-through rates and justify decisions to prioritize brand-name drugs over generics and biosimilars. With that information, patients, employers, and insurers can compare PBMs on meaningful metrics and choose those that prioritize lower drug costs.

Transparency works because it shifts the balance of leverage in negotiations. Once patients, employers, and insurers can see rebate retention, spread pricing, and net drug costs, they can stop rewarding PBMs that profit from higher prices and move to models that pass savings through. That pressure forces PBMs to compete on cost rather than hide in opaque market, because contracts become comparable and switching becomes feasible. Employers can demand pass-through pricing, avoid PBMs that steer patients to their affiliated pharmacies, and favor those that prioritize generics and biosimilars. When pricing is visible PBMs that lower costs win business, and those that rely on hidden margins lose it.

Fixing the problem means shedding light on this industry. Before federal requirements go into effect, state legislators can still act to require transparency from PBMs operating within their borders, including clear reporting on rebate pass-through and their prioritization of generics and name brands. Patients should not have to wait until 2028 for accountability.

 

Justin Leventhal is a senior policy analyst for the American Consumer Institute, a nonprofit education and research organization that advocates for consumers through evidence-based analysis and data. 

https://www.realclearhealth.com/articles/2026/05/08/patients_should_not_have_to_wait_until_2028_for_accountability_1181633.html