These days, prescription drugs are more expensive than ever, and it’s not only patients that are feeling that strain – employers are, too. Pharmacy services are one of the top drivers behind health benefit costs. This is largely due to inflation, rising drug list prices and the popularity of specialty drugs (like GLP-1s).

Another factor, which most employers are very familiar with, are middlemen and stakeholder dynamics. Historically, traditional pharmacy benefit management has lacked transparency. PBMs can engage in hidden markups and fees that cost plans sponsors a lot of money and drive inflation.

While PBM reform is raising expectations around transparency, drug cost management and long-term pharmacy performance require more than visibility alone. Learn more about what comes after transparency, including the steps your organization can take to better manage a successful pharmacy benefit.

What is a transparent PBM?

Most organizations that offer their employees pharmacy benefits work alongside a third-party that manages and dispenses their benefits program. This partner, called a pharmacy benefit manager (PBM), is an integral part of the process. They work as the middleman between employers, pharmaceutical companies and pharmacies.

PBMs can significantly affect the costs of prescription drugs for employers and their employees. And with the nature of their role, transparency is an important aspect of an employer’s partnership with a PBM.

A transparent PBM clearly discloses its compensation model, prescription drug pricing approach, how rebates and discounts are passed through and what fees it charges.

Transparent vs. traditional PBMs

Lack of fiduciary oversight has allowed pharmacy benefit management to be a largely unregulated space. With some traditional PBM partnerships, murky pricing practices have allowed undisclosed revenue streams to flow back to PBMs as opposed to plan sponsors.

One of these methods, called spread pricing, sees PBMs pocketing the margin on prescription drugs by charging an employer more than they pay their pharmacy partner. And some more traditional PBMs can also make money off prescription drug rebates from pharmaceutical companies for placing their drugs on a formulary and other sales incentives they don’t have to disclose.

In contrast, transparent PBMs don’t engage in these practices, charging a flat fee with no hidden revenue streams. Without the promise of rebates or marginal profits, these PBMs are more likely to work in an employer’s best interests.

What does transparency help employers understand?

When employers work alongside a transparent pharmacy benefit manager, they get a clearer picture of how much employees are using their pharmacy benefits and where the most money is being spent. This visibility allows employers to gauge the effectiveness of their plan and adjust as needed.

Also, transparent PBMs don’t profit from hidden pricing practices. When rebates are part of an agreement, transparent PBMs pass them through to an employer. This lowers health plan costs, and you, as an employer, know exactly where your money is going.

What impact is PBM reform having on transparency?

In February of 2026, Congress passed the Consolidated Appropriations Act. This sweeping legislation was designed to federalize pharmacy benefit management practices so PBMs are more transparent about where revenue flows. How PBMs make money will have to be shared with their employers.

Also, employers will be legally permitted to audit their PBMs to ensure they aren’t making money off other parts of the process. They will also receive regular data and analytics reports about how a plan is implemented and utilized.

Are transparent PBMs enough to lower drug costs?

This increase in transparency is a critical step toward lowering drug costs, launching the right conversations about visibility and efficiency in pharmacy benefit management. However, it’s not the only thing to consider for your pharmacy benefits. Transparency creates trust and visibility, but what you do with that visibility can help you manage trend and utilization.

What comes after transparency: Active cost management actions

Once you get a better understanding of how your pharmacy benefits work and how employees are using them, there are many ways you can turn visibility into action. The right pharmacy partner can help you:

• Actively oversee benefit utilization, tracking the medical necessity and cost-efficacy of the prescription drugs in your formulary
• Manage specialty medication use, monitoring utilization of expensive medications and specialty drugs like GLP-1s
• Track prescribing behavior by clinicians to decrease the risk of over-prescribing and encourage the use of lower cost options
• Review biosimilar strategies, encouraging more cost-effective versions of complex biologic drugs and therapies used to treat things like autoimmune disease, arthritis, Crohn’s disease and more
• Optimize site-of-care, urging patients to receive specialty infusion therapies in more cost-efficient clinical settings as opposed to expensive hospitals
• Support plan members with their medication adherence by leveraging digital, pharmacy-based programs (like apps) that ensure they take their medications as prescribed

The power of integrating your pharmacy benefits

While recent legislation is changing how the industry at large discusses and manages issues of transparency, organizations like HealthPartners have been operating with these principles even before reform. We know that it takes more than transparency alone to lower costs and drive a successful pharmacy benefit.

In addition to active steps like consistent data review and oversight, we see clear value in integrating medical and pharmacy benefits. Not only does this approach make administrative work much easier, but plan sponsors can track health care trends and monitor patterns across their entire benefits package. Having this data for your employees’ medical and pharmacy utilization will help you make more informed, efficient choices for your plan offerings and bottom line.