PBM Reform Is Exposing the Limits of Legacy Pharmacy Strategy for Payers

PBM reform is often framed as a policy story. But for health plans and payers, it's really a stress test: can their pharmacy strategy withstand a market where pharmacy benefit structures are becoming easier to see, question, and connect back to plan performance?

As new federal requirements, enforcement activity and state-level regulation put more pressure on pharmacy benefit economics, plans are being forced to look harder at how value is created, how decisions are made, and whether their current strategy and infrastructure is built for the market ahead.

The Push for Transparency Is Making Legacy Pharmacy Models Harder to Defend

For years, pharmacy strategies were able to operate with minimal transparency, resembling a black box. Value could be inferred from top-line performance, while the underlying economics, including margin, fees, rebate structures, and manufacturer dollars, remained difficult to see clearly, understand, and challenge.

That model is becoming harder to sustain. Now, federal legislation, disclosure requirements, enforcement activity, and state-level regulation are all intensifying the pressure for greater visibility into how pharmacy dollars move and how strategy decisions are made.

For plans, the question is no longer whether a pharmacy strategy produces savings. It's whether it provides savings and value that can be clearly explained, be fully compliant, and confidently defended.

PBM Reform Is Changing the Way Plans Define Value

For years, lowest net cost has been the dominant way pharmacy performance has been measured. It still matters, but it's no longer enough on its own. Plans are under more pressure to address a wider range of questions with increasing levels of detail: What factors drive the plan's drug utilization and overall drug cost? What pricing underpins the strategy? What does the member experience at the point of sale?

The Real Challenge Behind PBM Reform: Prescription Economics

While PBM reform is often framed around industry buzzwords like transparency and disclosure, the more meaningful challenge for plans is how prescription economics are changing underneath the benefit itself. Prescription economics looks beyond rebates alone and examines the full equation behind how value is created, distributed, and experienced across the pharmacy benefit.

PBM Reform Is Raising Fiduciary Expectations for Health Plans

As prescription economics become more visible and more connected, fiduciary expectations are no longer limited to broad oversight. Plans are being asked to show how the pharmacy benefit actually works: how decisions are made, how dollars move, what incentives shape the strategy, and whether those choices serve the interests of the plan and its members.

5 Pharmacy Strategy Priorities for Payers Responding to PBM Reform

1. Reassess formulary strategy. Plans need to understand whether their current approach is balancing net cost, list price, and member affordability and access.
2. Pressure-test PBM contracts. Transparency provisions, reporting requirements, audit rights, and visibility into financial arrangements are becoming more important as fiduciary expectations continue to rise.
3. Move away from bundled default models. One-size-fits-all pharmacy strategies are becoming less aligned with a market where plans need more control, visibility, and flexibility.
4. Prepare for benefit design decisions that reflect the full economic picture. Point-of-sale models and other affordability-linked approaches may not be right in every situation, but they are becoming harder to ignore.
5. Evaluate whether infrastructure can keep up. Plans need systems and partners that can provide the visibility, flexibility, and responsiveness required to manage pharmacy strategy in a more demanding environment.

Where PBM Reform Leaves Pharmacy Strategy

PBM reform is still evolving, and not every requirement has been fully defined yet. But the direction for plans is already clear: treating reform as a future reporting requirement is too narrow for the market already taking shape. The plans that view PBM reform as a compliance exercise will spend the next few years reacting. The ones that understand it as a shift in prescription economics will be better positioned to shape what comes next.

Interested in discussing this further? Contact us or visit expionhealth.com.