Breaking the PBM Monopoly: How Employers Can Cut Costs and Take Back Control
Weltrio Minute: Week of 2/26/2025
Breaking the PBM Monopoly: How Employers Can Cut Costs and Take Back Control
Pharmaceutical costs are rising quickly, and for years, Pharmacy Benefit Managers (PBMs) have been making a lot of money, much like a casino that always wins. PBMs were supposed to help employers and employees save money on medicines by negotiating better prices. Instead, many have become middlemen who keep rebates, increase costs, and make pricing confusing.
But things might be changing. Recent comments from leaders, like Robert F. Kennedy Jr. during his Senate Finance Committee nomination hearing, show that PBM reform is now getting attention. When almost everyone—from patients to policymakers—agrees that a system is broken, change is likely to happen.
What Does This Mean for Employers?
Employers should start rethinking their pharmacy benefits strategy now. Waiting for new laws might leave you behind while others move ahead with clearer, more cost-effective plans.
The Problem with the Current PBM Model
PBMs were created to negotiate drug prices for employers, insurers, and government programs to lower prescription costs. However, many traditional PBMs now profit from the system they were meant to control. Instead of passing savings directly on to employers and employees, they often:
Keep rebates: They get discounts from drug makers but don't share them.
Use spread pricing: They charge employers more than they pay pharmacies, keeping the difference.
Add hidden fees: Extra charges that increase costs without clear reasons.
Even employers who think they're getting a good deal might be stuck in complicated contracts with hidden markups. This lack of clarity means many are overpaying for prescriptions without knowing it.
The Push for Change
In his recent remarks, Kennedy highlighted the commitment to PBM reform over the next four years. The push for greater transparency in pharmaceutical pricing has bipartisan support, with policymakers recognizing that the current model is unsustainable.
Several proposed reforms are gaining attention:
Eliminating hidden PBM rebates: Some proposals call for manufacturers’ rebates to go directly to patients rather than PBMs.
Mandating transparency in PBM contracts: Employers and plan sponsors should be able to see exactly where their money is going.
Ending “spread pricing”: PBMs often charge insurers and employers more than they reimburse pharmacies, pocketing the difference. Reform efforts seek to stop this practice.
For employers, this is a pivotal moment. Businesses that rely on traditional PBM contracts may soon find themselves facing significant changes in their pharmacy benefits. Those who are proactive in adopting a more transparent approach now will be ahead of the curve as reforms take shape.
A Better Way: Transparent PBMs
Instead of waiting for laws to change, some smart employers are already switching to transparent PBMs. These PBMs pass savings directly to employees and remove conflicts of interest. Our company has always valued honesty in managing pharmacy benefits, so we've teamed up with PBMs that work differently.
Transparent PBMs offer:
No hidden fees or rebates: They avoid drug company rebates that raise medication costs.
Pass-through pricing: Employers and employees pay exactly what the PBM pays for the drug—no extra charges.
Real cost savings: Without incentives to choose expensive drugs, transparent PBMs focus on cheaper, effective medications.
Clearer choices for employers: When companies know exactly what they're paying for prescriptions, they can make better decisions about benefits.
What Employers Should Do Now
If PBM reform is coming, why act now? Even without new rules, a transparent approach can save money and make employees happier today.
Here's how companies can get ahead:
1. Review current PBM contracts: Many traditional agreements have complex pricing that hides costs. An audit can reveal hidden fees and possible savings.
2. Consider switching to a transparent PBM: Choosing a PBM that matches your financial and ethical goals can cut unnecessary costs.
3. Educate employees about prescription benefits: Transparency means little if employees don't know how to find affordable medications. Offer training sessions, online tools, and personal support to help them make smart choices.
4. Keep an eye on legislative changes: While reform isn't certain, watching federal and state actions can help employers adjust their plans.
The call to reform PBMs is growing, and employers have a chance to lead. By adopting transparent pharmacy benefit models now, businesses can cut costs, ensure fair pricing for employees, and bring honesty back to prescription drug coverage.
As policymakers push for change, companies that have already embraced transparency will be better positioned to navigate the evolving landscape. Rather than reacting to new rules, they will lead in offering cost-effective, employee-friendly benefits—a move that pays off in both financial savings and workforce satisfaction.
Weltrio Win
Cayuse Technologies was struggling with rising healthcare costs, so they partnered with Weltrio to find a better way. One big change was moving to a transparent pharmacy benefit manager (PBM). Unlike traditional PBMs that hide costs, this new PBM charged a simple, flat fee per prescription and only added the actual cost of the drug—no hidden markups.
All manufacturer rebates were returned to Cayuse every quarter, putting money back into the company instead of the PBM’s pocket. Employees also gained the freedom to fill prescriptions at any pharmacy they preferred, giving them more choices and convenience.
By making this switch and other changes recommended by Weltrio, Cayuse cut medical insurance premiums by 68% and reduced employee out-of-pocket expenses by 39%, all while maintaining high-quality benefits. Thanks to Weltrio’s expertise, the company saved money, improved benefits, and ensured long-term cost control with a fair and honest approach.
How Weltrio Can Help
Having Weltrio on your team gives your company a competitive edge while keeping employees happy and financially secure. Many businesses overpay for healthcare because traditional Pharmacy Benefit Managers (PBMs) hide costs and take a share of drug rebates. Weltrio changes that.
By choosing Weltrio, companies gain cost savings, pricing transparency, and employee trust. When workers see their employer making smart, fair choices, they stay loyal and engaged, creating a stronger, healthier workforce.
References:
Mahoney Group. (2025, March). Pharmacy benefit managers reform: What employers need to know. Retrieved February 26, 2025, from https://www.mahoneygroup.com/pharmacy-benefit-managers-reform/
