Pharmacy Benefits Uncut

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I came across a comment on LinkedIN a few weeks ago that said if we keep calling something unsustainable but keep paying for it, it’s actually sustainable. This is what we’ve been doing in the employer-sponsored pharmacy benefits world for the better part of the last decade.

But now with drug spend consuming almost 30% of total healthcare spend, and no sign of it slowing, a growing number of employers are realizing they have to act now. If you’re part of this group, here are five things you need to do in 2026 to right your pharmacy benefits ship.

1) Get Engaged

No employer will ever manage to optimize their pharmacy benefits plan without being actively involved in it. This isn’t something you can outsource to even the best broker or consultant. You as the employer need to be fully engaged in this effort. And it needs to begin at the top with the C-suite folks. Having one HR person responsible for pharmacy benefits isn’t going to cut it. You need organizational heft behind the effort. You don’t need to become an expert in everything pharmacy benefits, but you do need to develop a basic understanding of how this industry works so that you can make informed decisions and ask some hard questions.

And then you need to devise a detailed fiduciary-aligned plan with achievable goals to reduce your drug spend AND improve the health of your plan members. Focus on developing a long-term outlook, directly overseeing every aspect of your pharmacy benefits plan, and taking data-driven approach to making your decisions.

2) Address Misaligned Incentives

It’s well known that the employer-sponsored pharmacy benefits world is rife with conflicts of interest and information asymmetry. One of the key strategies to addressing the ever-increasing costs of prescription drugs is systematically addressing these misaligned incentives that lurk in every corner.

Begin by making sure your benefits broker or advisor isn’t depending on additional revenue streams that create a conflict of interest (i.e. commissions from PBMs or other vendors). They should be working on behalf of you and your plan members and no one else. If they’re not, it’s time to find a new partner.

If you’re working with the traditional PBM model, there are likely misaligned incentives up the wazoo that are increasing your drug spend. Think rebate structures, drug formulary decisions, and biosimilar penetration rates.

Although PBMs are likely the biggest culprits when it comes to working against the interests of employers, other vendors providing services in this space may also be unnecessarily driving up your costs through misaligned incentives.

Do a deep dive into how your vendors operate and whether their incentives are aligned with yours. Ask some hard questions and be willing to walk away when necessary.

3) Provide a Plan that Works for Your Members

No amount of money, state-of the-art points solutions, or complex algorithms are going to fix your pharmacy benefits plan if you’re not meeting your plan members where they are. Develop an engagement strategy to understand what they’re satisfied with, what they're struggling with, and what their priorities are in relation to their drug therapies. You may be surprised at what you find, since often your priorities and perceptions are different from your plan members’ priorities and perceptions.

Harness this information to design a pharmacy benefits plan that works for your members. It’ll not only increase their satisfaction, but it’ll also save you money, address inequities in access to medications, and improve health.

Also, keep in mind that plan member engagement isn’t a once-a-year, one-and-done proposition. Implement a process for ongoing engagement with your plan members to make them full partners in all of their healthcare decisions.

4) Move Beyond PBM Procurement

Undoubtedly our conversations about the unsustainability of employer-sponsored pharmacy benefits focus on PBMs, and of course the traditional PBM model is a large part of the problem. But offering a pharmacy benefits plan that’s a pillar of improved health for your members goes beyond simply switching PBMs. It requires you to offer clinical services that help plan members optimize their medication use. These services include things like comprehensive medication management (CMM), pharmacogenomics testing, and chronic disease management.

​Comprehensive medication management involves a pharmacist assessing each medication a plan member is taking and determining its appropriateness, with the goal of developing an individualized care plan for the member with defined health outcomes that can be evaluated over time.

​Pharmacogenomics testing helps identify how a plan member’s genetic makeup determines their response to a particular drug. It can be used to ensure plan members receive the correct drug at the correct dosage and identify which members are at greatest risk for experiencing adverse events.

Chronic disease management by pharmacists aims to improve health outcomes for members suffering from conditions such as diabetes, high-blood pressure, or other long-term health issues by providing medication management, education, lifestyle guidance, and ongoing monitoring.

These interventions have all been shown not only to improve plan members’ health but also reduce overall healthcare costs for employers.

5) Implement Appropriate Vendor Oversight

We talk a lot about money leaking to middlemen, conflicts of interest, and waste, fraud and abuse in the pharmacy benefits industry. Of course we need to institute regulations to address these issues, but one of the best ways for individual employers to patch the holes from which their pharmacy benefits dollars are leaking is to implement a process for vendor oversight.

If you’re like most employers, your pharmacy benefits plan chugs along in the background and you only really pay attention to it when it comes time to renew your PBM contract. This is the perfect setup for financial unsustainability.

You need to institute a process for ongoing vendor oversight. For each of your vendors make sure you establish key performance indicators (KPIs) and evaluate them quarterly. For example, if one of the indicators for your PBM performance is increased biosimilar penetration, require them to provide you with this data. Similarly, if you’re working with a pharmacogenomics testing service to help streamline antidepressant prescribing ask for evidence that the program is working.

If you’re not getting the results you expect, don’t be afraid to push back. You’d be surprised how quickly your vendors are willing to make the requested accommodations when they know you’re keeping an eye on things.

The Bottom Line

You may be overwhelmed by the complexity of your pharmacy benefits plan and its sky-rocketing costs. The good news is that it’s fixable, so commit to making 2026 the year you fix it. You don’t need to become an expert in pharmacy benefits to figure it out. You simply need to implement systems to address these five issues as part of the ongoing stewardship of your plan.

Happy holidays and see you in 2026.

Nina

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Pharmacy Benefits Uncut is produced by Healthcare Decision Making, a consultancy that helps small and medium sized employers optimize their pharmacy benefits plan. We offer a comprehensive range of services focused on three areas: PBM procurement, ongoing management of your pharmacy benefits plan, and self-policing and oversight of your pharmacy spend. To learn more about how Healthcare Decision Making can help you, email Nina Lathia at nina.lathia@healthcaredecisionmaking.com

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