Transparency for PBMs. Can It Become Something More than Just a Buzzword?

Pharmacy benefit management is a system that many say is broken. Traditional, vertically integrated PBMs lack alignment with payers and patients in a system that is complex, opaque and secretive, say many of the smaller and midsize PBMs that Formulary Watch and Managed Healthcare Executive (MHE) have spoken with for an effort to create a PBM directory. Several common themes emerged from our survey.

In this series on the PBM industry, we’ll highlight several of them. Last week, we addressed state PBM reform efforts that are filling a void left by inaction on the federal level.

Justin Jasniewski

In this story, we are turning our attention to transparency. “Transparency is not just a buzzword in the PBM space,” said Justin Jasniewski, CEO of Serve You Rx, one upstart PBMs that is positioning itself as an alternative to the large PBMs that dominate the industry. “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,” he said in an interview with MHE. Jasniewski has been selected as one of this year’s Managed Healthcare Executive Emerging Leaders in Healthcare.

The next story in this series will look at the high list price of drugs, including the glucagon-like peptide 1 drugs and the affordability of drugs for consumers.

Formulary Watch and Managed Healthcare Executive have also begun an initiative to develop a database of PBMs. You can find the PBM Directory here. We will continue to add to this list as more information becomes available.

A veil of secrecy

PBMs were originally created to administer pharmacy benefit programs. But over time, acquisitions and vertical integration of pharmacies, PBMs, group purchasing organizations and health plans have created what some critics ay are conflicts of interest and misaligned incentives. The three largest PBMs — CVS Caremark, which is part of CVS Health; Express Scripts, which is part of Cigna; Optum Rx, which part of UnitedHealth Group — control about 80% of the pharmacy benefit market. Beyond the “big three” are smaller companies with many trying to disrupt the sector.

The large integrated PBMs are facing continued pressure to provide transparency and models that are aligned with employers’ and plans’ interests. “Employer dissatisfaction and lawsuits that bring the fiduciary responsibility of the employer to light, inclusive of how their PBM vendors’ motivations and business practices 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 the results of a survey conducted last year by the consulting company Pharmaceutical Strategies Group (PSG). Customers of the big 3 PBMs reported lower satisfaction across most measures, including overall satisfaction, and they are less likely to recommend their PBM, the PSG survey found.

David Joyner

These larger PBMs, however, say 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 2025, David Joyner, CEO of CVS Health, said that the company is on a “pharmacy transformation journey” that involves launching two programs that define drug costs, identify markups, and provide more insight into costs.

CVS Caremark has launched two programs. One is CVS CostVantage, which is a pharmacy reimbursement model that 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 is called TrueCost, a model that offers client pricing reflecting the true net cost of prescription drugs, with visibility into administrative fees.

UnitedHealth 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, he said.

Cigna, starting in 2026, will release an annual “customer transparency” report to show how it’s progressing, including information about care facilitation and resolution statistics. Evernorth, Cigna’s health services division, has also said that it will focus on improving patient access to affordable medications and creating an Office of Excellence and Transformation to oversee these efforts.

Related: CEOs defend their PBMs. Don’t believe it, says a critic

Still, executives from Navitus said in our survey that the larger PBMs operate behind a veil of secrecy. “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.”

Navitus is a PBM that passes 100% of rebates and discounts on to plan sponsors and health plans and provides clients with full access to their data, down to the individual claim level.

Joe Shields, managing director of Transparency-Rx, a trade group of smaller PBMs, remains skeptical that the 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 Managed Healthcare Executive 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 opacity of the U.S. healthcare system has also led to wasteful spending, mostly for administrative costs, according to a 2023 analysis by the Peter G. Peterson Foundation. “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, group purchasing organizations (GPOs), and manufacturers under the same corporate umbrella reduces market competition, leaders 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/Select Health.

Traditional PBM contracts are often deliberately complex and inflexible, with only 25% of customers reporting high satisfaction with their PBM’s transparency, Jasniewski said.

“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,” Serve You Rx executives said.

Kristin Begley

The real issue, said Kristin Begley, 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, plan sponsor, or union government spends, the more the PBM makes. AWP is an inflationary price source that can be manipulated by PBMs.”

Capital Rx is a PBM that launched in 2017 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 United States. 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 people in 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, hospitals, TPAs, and state and local governments and makes available to clients rebate details, network contracts, and audit information.

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 executives from Rightway. “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.”

Rightway is a transparent PBM supported by a care navigation technology.

The rebate debate

Total manufacturer 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 at all, and more than 60% are interested in cost-plus pricing models, according to PSG’s newly released 2025 Trends in Specialty Drug Benefits Report. But two-thirds of the respondents said their plan has experienced an increase in the amount of rebates they have received in the last 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, co-sponsored 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, M.P.H., Ph.D., 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 guarantees in terms of rebates in exchange for implementing more utilization management. In the future, the number of payers who receive rebates may start to decline as more consider low-list-price biosimilars and as they begin to see more models without rebates.