PBM Transparency: Can It Be More Than a Buzzword?

Editor's note: An earlier version of this story was posted on June 6, 2025

Complex, secretive and opaque — those are the words that critics of the large pharmacy benefit managers (PBMs) often sling when describing the targets of their critique. Those critics include small and midsized PBMs seeking a piece of the PBM pie that, by some accounts, has reached $500 billion in the U.S. alone. The PBMs that dominate the industry say they have responded to the criticism with programs and products that supply the transparency their attackers say is lacking.

The two sides are now battling it out in the marketplace — and in the hallways of the U.S. Congress. There are provisions affecting PBMs, some involving transparency, in the2025 reconciliation package, officially titled the One Big Beautiful Bill Act, that the U.S. House of Representatives passed in May.

Justin Jasniewski, MBA

“Transparency is not just a buzzword in the PBM space,” says Justin Jasniewski, MBA, CEO of Serve You Rx, one of the smaller PBMs that is positioning itself as an alternative to the larger ones. “If I could change one thing, it would be making the entire ecosystem, both PBM and medical, more transparent, so that providers can compete on price versus consumers just bearing the cost of whatever it is.”

In the spotlight

The PBM industry was once a quiet backwater of the U.S. healthcare system that only a few insiders knew about or paid attention to. But because of consolidation and integration with health insurers that took off in the early ’90s, they have grown in prominence — and notoriety, depending on your point of view. The three largest PBMs — CVS Caremark, which is part of CVS Health; Express Scripts, which is part of Cigna; and Optum Rx, which is part of UnitedHealth Group — now control about 80% of the pharmacy benefit market (some analyses suggest it is a smaller proportion). Beyond the “big three” are smaller companies, many of which are trying to disrupt the sector.

The large integrated PBMs are facing continued pressure to provide transparency and models aligned with employers’ and plans’ interests. Managed Healthcare Executive (MHE) has been surveying PBMs as part of our effort to create a definitive list of PBMs operating in the U.S. Click here to go to the directory.

Employer dissatisfaction about their PBM vendors’ motivations and practices, as well as lawsuits that aim to bring fiduciary responsibility from PBMs, impact everything from data access to the prices paid for drugs, executives from Capital Rx said in our outreach for the PBM directory.

Payers are increasingly dissatisfied with PBMs and want some degree of change, according to a survey conducted last year by the consulting company Pharmaceutical Strategies Group (PSG). The survey showed satisfaction scores of 7.6 out of 10, which indicates moderately high satisfaction, but PSG reported that it was the second year in a row of the lowest overall satisfaction in a decade. Net promoter scores for PBMs overall were barely in the positive range, falling from 38 in 2021 to 6 in 2024, according to the survey. PSG also found that payers that used one of the big three PBMs reported lower satisfaction across multiple measures, including overall satisfaction and likelihood to recommend their PBM.

David Joyner

These larger PBMs say, though, that they continue to introduce new options to provide customers with transparency. CVS Health, UnitedHealth Group and Cigna have all committed to transparency efforts. During an investor call in February, David Joyner, CEO of CVS Health, said the company is on a “pharmacy transformation journey” that involves launching two programs that clearly identify drug costs and the amount of its markup. The company says that CVS CostVantage will define the drug cost and related reimbursement using a formula built on the cost of the drug, a set markup, and a fee that reflects the care and value of pharmacy services. The other program, TrueCost, is a model that offers pricing that reflects the true net cost of prescription drugs, with visibility into administrative fees.

Meanwhile, UnitedHealth Group has said it will pass through 100% of the rebates it receives from drugmakers to its payer clients by 2028. The company will continue to encourage all its clients to fully pass these savings directly to patients at the point of sale.

Cigna has said that starting next year, it will release an annual “customer transparency” report to show how it is progressing, including information about care facilitation and resolution statistics. Evernorth, Cigna’s health services division, has also said it will focus on improving patient access to affordable medications and creating an Office of Excellence and Transformation to oversee these efforts.

The midsize and small PBMs competing with the big three are not persuaded that the big three have turned a new leaf. Executives from Navitus, a well-established, midsize PBM that says it passes through 100% of discounts and rebates to plan sponsors, were unstinting in their criticism, given in response to the MHE survey. “Despite wielding significant power in negotiating drug prices and managing formularies, some PBM practices disadvantage patients,” Navitus leaders said. “These practices include backroom deals with pharmaceutical companies where hefty rebates are offered on costly brand-name medications, only to have the PBMs hold back a large portion of these rebates as profit. PBMs often guide consumers to these drugs when less expensive generics are widely available. This lack of transparency and focus on financial gain creates a system where medication costs escalate, patient affordability is limited and, ultimately, patient health suffers.”

Joe Shields

Joe Shields, president of Transparency-Rx, a trade group representing smaller PBMs, remains skeptical that the big three programs will do what they say. “They [the larger PBMs] have discovered that transparency is an important value that the market wants,” Shields said in an interview with MHE earlier this year. “From a branding and a marketing standpoint, they have to say they’ve embraced transparency. But the truth is, they largely remain as opaque and secretive in terms of their approaches.”

The complexity of the U.S. healthcare system has also led to wasteful spending, a contributing factor to the U.S. having the highest per capita healthcare expenditures in the world by far, according to a 2023 analysis by the Peter G. Peterson Foundation, a nonpartisan foundation that focuses on fiscal matters. According to numbers presented in the foundation’s analysis, $1,055 ofthe annual $12,900 spent on healthcare on a per capita basis can be chalked up to administrative complexity stemming from having multiple payers. In contrast, Japan spends just $82 in that category. “An entire ecosystem has been cobbled together to maintain and capitalize on preserving inefficiency,” leaders from Capital Rx said.

‘Deliberately complex’

The consolidation of PBMs and the creation of group purchasing organizations have reduced market competition in the industry, respondents from Scripius said in our survey. “This structure allows the dominant players to exert significant control over drug pricing and formulary design, limiting options for smaller competitors and restricting consumer choice.” Scripius is a PBM founded by Intermountain Health, a healthcare system headquartered in Salt Lake City, Utah, and Select Health, its health insurance subsidiary.

Traditional PBM contracts are often deliberately complex and inflexible, with only 25% of customers reporting high satisfaction with their PBM’s transparency, noted Jasniewski of Serve You Rx. “This creates an environment where PBMs are incentivized to drive revenue to themselves at the expense of plan sponsors. The confusing contracts make it difficult for clients to understand what they’re paying for or implement programs outside the PBM’s standard offerings without significant cost increases,” he wrote in his response to the MHE survey.

Kristin Begley, Pharm.D.

The real issue, says Kristin Begley, Pharm.D., chief commercial officer at Capital Rx, is a lack of alignment. “It’s not hard to see what is wrong or missing in the PBM industry based on average wholesale price,” she said in a recent interview. “You have financial opacity, you have price discrimination, and you have misaligned economics, meaning the more the drug costs or the more the ultimate customer — the plan sponsor — spends, the more the PBM makes. AWP is an inflationary price source that can be manipulated by PBMs.” The AWP is the average price a retailer pays to buy a drug from the wholesaler, but it does not reflect discounts and rebates. For that and other reasons, it is often criticized as being an unreliable benchmark.

Capital Rx, which opened for business in 2017, has staked its reputation on using national average drug acquisition cost (NADAC) pricing and charging an administration fee. NADAC is the approximate invoice price pharmacies pay for medications in the U.S. CMS randomly surveys 2,500 pharmacies out of the 67,000 operating in the nation. It is updated weekly.

The need for PBMs to take on a fiduciary duty tied to pharmacy benefits was mentioned by several respondents to our survey. “A growing number of lawsuits related to breach of employer fiduciary duty have targeted large, well-known companies,” said executives from Liviniti. “Employers using PBMs that operate a traditional model, in which PBM revenue is linked to rebates and drug prices, have clear conflicts of interest. The traditional PBM model puts employers at risk — and drives up drug costs for their employees.” Liviniti is a PBM that serves self-insured employers, unions and hospitals that promises to disclose information about rebates, network contracts and audits.

The opacity of the larger PBMs makes it nearly impossible for plan sponsors to evaluate whether their PBM is working in their best interest, said the executives from Rightway in a response to outreach. “The system is intentionally complex, and that complexity hides waste. To fix it, we need true fiduciary models, clear data, and PBMs that prioritize patient outcomes over profits.”

The rebate debate

Rebates paid to PBMs reached $334 billion for all brand-name drugs in 2023, according to a 2024 report from the Drug Channels Institute.

PBMs in our informal survey say the complex and nontransparent system of rebates and fees often obscures the true cost of medications, leaving payers uncertain about their actual financial obligations.

Transparency for many PBMs “goes out the window on the rebate side,” Jasniewski said in a recent interview. “There’s a bigger push for rebate transparency,” he said.

Payers are increasingly open to alternatives to traditional programs. About 80% are interested in lower-cost drugs that offer no rebate, and more than 60% are interested in cost-plus pricing models, according to PSG’s “2025 Trends in Specialty Drug Benefits Report.” However, two-thirds of the respondents said their plan has experienced an increase in the number of rebates they have received in the past one to two years under the pharmacy benefit for specialty drugs, and just over half saw an increase under the medical benefit. The PSG report, cosponsored by Genentech, was based on an annual survey conducted in September and October 2024. The survey included 231 benefit leaders from employers, health plans, and unions.

Morgan Lee, Ph.D., M.P.H., senior director of research and strategy at PSG, said in a recent interview that about a third of respondents to the survey are actively working to implement rebate alternatives. “It’s hard to move away from rebates. That’s part of why we see it being a little bit slow in terms of the real movement there.” PSG is beginning to see a shift with some payers accepting lower rebate guaranteesin exchange for more utilization management. In the future, the number of payers that receive rebates may decline as more consider biosimilars with low list prices and pricing schemes for other drugs that have prices without rebates