In this rapidly evolving landscape, transparency is not just a regulatory buzzword – it is a competitive advantage.
Many states now require PBMs to disclose aggregate spending and rebates, and to pass a portion of rebates directly to consumers. Yet even with these laws, employers often find that the majority of rebate dollars are used to offset premiums rather than reduce out‑of‑pocket costs. As a result, employees continue to pay high copays while plan sponsors and PBMs split the rebate savings.
These third‑party administrators handle prescription drug benefits for insurers, self‑funded employers, and government programs, processing about 90% of all prescription claims. PBMs negotiate drug prices with manufacturers, create formularies, process claims and steer patients to specific pharmacies.
In theory, this role should lower costs and simplify administration.
In practice, opaque contract terms, vertical integration and complex rebate arrangements have turned PBMs into some of the most controversial players in health care.
As federal and state regulators intensify their scrutiny, greater transparency is emerging as a central theme – and a competitive advantage for employers seeking to control costs and meet their fiduciary duties.
A new generation of transparent PBMs are cropping up in response to the less than sportsmanlike practices from those that control the bulk of the market share.
The market power of the “big three” PBMs – CVS Caremark, Express Scripts and OptumRx – cannot be overstated. They control around 80 percent of the market, giving them outsized influence over drug pricing. An interim report from the Federal Trade Commission (FTC) in 2024 revealed that PBMs use this dominance to favor their own pharmacies and push higher‑cost medications onto formularies. Exclusive network arrangements can block independent pharmacies even when they offer better prices. The report also highlighted the growth of rebate aggregators – third‑party entities created or controlled by PBMs to negotiate with drug manufacturers. These aggregators generated $7.6 billion in fees by 2022 and were seen as a way for PBMs to retain revenue and evade reforms. By turning rebate negotiations into a separate revenue stream, PBMs reduce the amount of savings passed on to plan sponsors and patients.
The growing criticism of opaque PBM practices has spurred action in Washington. In February 2025, Senators Chuck Grassley (R‑IA) and Maria Cantwell (D‑WA) reintroduced two bipartisan bills aimed at addressing PBM abuses. The Prescription Pricing for the People Act of 2025 would require the FTC to conduct a comprehensive study of PBM consolidation, pricing practices and potential anti‑competitive behavior. This study would analyze whether PBMs steer patients to owned pharmacies, design formularies to favor higher‑cost drugs, and reimburse pharmacies less than they charge plan sponsors.
The companion Pharmacy Benefit Manager Transparency Act of 2025 goes further. It would ban deceptive and unfair pricing schemes, prohibit spread pricing in PBM contracts and require PBMs to report to the FTC how much money they earn from spread pricing and pharmacy fees. The bills have broad support from the AARP, pharmacy associations and community oncology groups, indicating a rare consensus across patient and provider advocates that PBM opacity must end. Such federal legislation, while still pending, signals a bipartisan appetite for fundamental reform.
As regulations tighten, employers are becoming more aware of how PBM practices affect their bottom line.
Many states now require PBMs to disclose aggregate spending and rebates, and to pass a portion of rebates directly to consumers. Yet even with these laws, employers often find that the majority of rebate dollars are used to offset premiums rather than reduce out‑of‑pocket costs. As a result, employees continue to pay high copays while plan sponsors and PBMs split the rebate savings.
This growing awareness is prompting employers to seek alternatives. Many are exploring pass-through PBM models – arrangements where the PBM charges a flat administrative fee and bills the plan exactly what it paid the pharmacy for the drug. Such models eliminate spread pricing and ensure that manufacturer rebates flow directly to the plan sponsor. Some PBMs are adopting this approach in response to regulatory pressure and customer demand. Others are experimenting with artificial intelligence‑driven analytics to forecast spending and guide formulary decisions, arguing that predictive modeling can reduce costs and improve adherence.
In this rapidly evolving landscape, transparency is not just a regulatory buzzword – it is a competitive advantage.
Self‑insured employers need partners who align with their fiduciary responsibilities, offer clear pricing, and help them navigate complex regulatory requirements. Aphora Health embodies this new generation of PBM solutions. Rather than relying on spread pricing or rebate games, Aphora Health operates on a cost‑based, pass‑through model: employers pay a transparent administrative fee and are billed the same amount that Aphora pays pharmacies. There are no hidden markups or opaque rebates, and clients receive real‑time reporting on every claim and rebate. This approach aligns directly with emerging state and federal mandates that prohibit spread pricing and require rebate disclosure.
Aphora Health’s high‑touch care navigation ensures that employees are guided toward the most cost‑effective, clinically appropriate therapies, helping them avoid unnecessary medications and improving adherence. By offering $0 copays and eliminating surprise fees, Aphora reduces barriers to medication adherence and enhances employee satisfaction. And because the company’s revenue is not tied to drug prices, it has no incentive to prefer higher‑cost drugs – aligning perfectly with employers’ fiduciary duty to act in participants’ best interests.
As PBM transparency becomes a central focus of regulators and legislators, employers who continue to rely on opaque, spread‑based contracts risk both financial overcharges and potential legal exposure. The avalanche of state laws and the bipartisan momentum in Congress show that the era of secret rebates and hidden fees is ending. Aphora Health is designed for this new era, providing a transparent, fiduciary‑aligned pharmacy benefit solution that meets regulatory requirements while delivering significant savings and a superior member experience. For employers seeking to protect their employees and control costs, partnering with Aphora Health is a frictionless way to save while seeing what’s really happening under the hood.
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