NEW YORK — Change continues to sweep through the pharmacy benefit management industry, most notably with Optum Rx’s transparency initiative.
Notwithstanding Optum’s move to a fee-based structure, questions remain over how much long-term benefit retail pharmacy will gain, and whether PBMs’ own actions will lessen the need for the recently enacted federal reform.
“The PBM industry is entering a period of structural change, driven by federal scrutiny, employer demand and the industry’s own recognition that legacy compensation models are no longer sustainable,” says Joseph Kleiman, president of Buzz Health. “Moves toward fee-based, more transparent arrangements are meaningful, but the long-term test will be whether those changes translate into lower costs and clearer decisions for patients, providers and pharmacies.”
Transparency may help ease some of the margin pressure faced by pharmacies, says Kleiman, but profitability will still depend on whether the broader prescription ecosystem can close the gap between upstream pricing reform and real-time affordability at the point of care. “If prescribers and pharmacists still lack visibility into what a patient will actually pay, abandonment and workflow friction will remain even as PBM models evolve,” he says.
RxTran chief executive officer Sharon Blank says, “PBM transformation is real and arriving on two timelines” — self-initiated integration and transparency moves running ahead of the federally mandated reset still working through Federal Trade Commission scrutiny.
Optum says its new model fundamentally changes how pharmacy benefits are priced and delivered — replacing traditional approaches tied to drug prices set by manufacturers or prescription volume with a transparent, fee‑based structure offered to every customer. The model is designed to fully align incentives with patients and plan sponsors, bringing greater clarity, predictability and affordability to pharmacy care — supported by digital capabilities that help patients better understand costs and make informed choices.
The new model offers clients “a simpler and more predictable pharmacy system,” says Optum CEO Dr. Patrick Conway.
Under the new approach, clients will be offered a pricing structure with monthly, clearly defined fees per member independent of manufacturers’ list prices or prescription volume, eliminating spread pricing and similar practices. Every client will have transparency into Optum fees — including those associated with its group purchasing organization — with clear disclosure of payments received from drug manufacturers. By the end of 2027, group purchasing will fully transition to flat service fees.
Doug Hoey, CEO of the National Community Pharmacists Association (NCPA), says while Optum’s move is aimed at payers, it also has ramifications for community pharmacies. “The announcement suggests a demand by payers for something different than the old, tired PBM arbitrage model,” he says. “For pharmacies, a ‘cost-plus’ (or better yet, ‘cost-plus-plus’) could work, but pharmacies have to be paid fairly. Cost to dispense studies show that it costs pharmacies between $12 and $15 to dispense a prescription. Paying pharmacies less than that will result in pharmacies choosing to reject the contract or will create pharmacy deserts after the pharmacy closes. The success or failure of Optum’s move will have a lot to do with their offering to pharmacies.”
The need for legislative action on PBMs was restated by NCPA with its endorsement of the Patients Before Monopolies Act, which would force companies that own health insurers or PBMs to divest their pharmacy businesses within three years. First brought up in December 2024, it was reintroduced last month in both the House and the Senate. It’s being led in the House by Reps. Diana Harshbarger (R., Tenn.), Jake Auchincloss (D., Mass.), Greg Landsman (D., Ohio), Buddy Carter (R., Ga.), Jerry Nadler (D., N.Y.) and Troy Nehls (R., Texas) and in the Senate by Elizabeth Warren (D., Mass.), Josh Hawley (R., Mo.), Roger Marshall (R., Kan.) and John Fetterman (D., Pa.).
NCPA says the bill aims squarely at conflicts of interest created by vertically integrated PBMs by prohibiting a parent company from owning both a PBM/health insurer and a pharmacy; requiring divestiture of pharmacy assets; establishing strong enforcement; enabling private right of action; and preventing reconsolidation that would recreate the anticompetitive structure.
“The giant corporate PBMs are trying to use smoke and mirrors to convince members of Congress and state legislators that there’s nothing wrong with their business practices. But we know better,” says Hoey. “They often steer patients away from competing pharmacies and into their chain location or their mail-order pharmacy — even if their steering has a detrimental effect on patients. They reimburse their own pharmacies higher amounts than they reimburse competing pharmacies for the same prescriptions, just one tactic that forces independent pharmacies to close and robs patients of access to care.
“PBMs have a choice — operate as a PBM or operate as a pharmacy, but you can’t have it both ways. Having both functions under one roof is a huge conflict of interest and drives up prescription drug prices. The Patients Before Monopolies Act is critical in supporting patients and independent pharmacies and restoring a free market.”
A law passed by the Tennessee legislature banning a company from owning or controlling both a pharmacy and a PBM, and in some cases a health insurer, has been dismissed by CVS Health as a misguided effort to benefit independent pharmacies. CVS has sued to block the law on the grounds that it violates the Constitution’s interstate commerce clause.
At the federal level, David Marin, president and CEO of the Pharmaceutical Care Management Association, representing PBMs, said Congress should bring greater transparency and competition to other segments of the drug supply chain.
At the Axios Future of Health Summit, Marin highlighted how significant business changes, coupled with the enactment of PBM reform, are reshaping the industry. He remarked that unprecedented transparency, “delinking,” and full rebate pass-through are now the law of the land. “A lot of these things were happening already,” he said. “A lot of them are self-initiated by our member companies. But a lot of them are part of a massive reform package that Congress passed earlier this year. That’s a good thing, and now we can move on and shine the light on other parts of the chain that deserve the same level of transparency.”
Marin encouraged Congress to turn to patent reform, saying Big Pharma has kept prices too high. “Now that PBM reform is done, I would hope that Congress can turn to the reality that pharma abuse of the patent system is what extends monopoly pricing for too long for too many. Forty-two years ago, Congress passed a sophisticated and thoughtful bill called Hatch-Waxman, and what it was intended to do was to create a really careful balance between the need and the desire for innovation, with the need, after a certain amount of time, for competition. That balance has been completely upset ever more over the years as they get more and more creative with how to extend their monopoly pricing.”
He also emphasized the importance of promoting transparency across other parts of the supply chain that are not well understood, including drug wholesalers.
Marin closed with a reminder of the clinical services that PBMs provide, including safeguards against harmful drug interactions and adherence programs that help patients stay on track. He also commented on what the health care system would look like in a world without PBMs: “I think drug costs today are still too high. They’d be a ton higher without PBMs.”
For his part, Pharmaceutical Research and Manufacturers of America president and CEO Stephen Ubl outlined developments that he believes “will move the marketplace in the right direction,” including PBM reform. He said at the Axios summit that the legislation “breaks the link … for how PBMs get paid,” and includes “a number of transparency requirements.”
Paul Pruitt, co-founder and chief growth officer of SHARx, says a deeper and more urgent problem is that employers are funding a system they cannot see or audit, while employees still struggle to access the medications they need.
SHARx, a procurement management solution for high-cost drugs, highlights what it says is the growing disconnect at the center of the PBM model. Employers pay for rising drug costs, yet powerful intermediaries control access by designing formularies, managing pharmacy networks and imposing utilization controls such as prior authorization and step therapy.
