Shaping Transparency in Today’s and Tomorrow’s Pharmacy Benefits Marketplace

True transparency in the pharmacy benefit marketplace is more than publishing numbers or simplifying reports. It requires clear contractual, financial, and clinical accountability so plan sponsors can understand what drives their costs and what value they receive. When done correctly, transparency reduces the influence of artificial or undisclosed pricing structures and encourages a market focused on full disclosure of Pharmacy Benefit Management (PBM) revenue streams, aligned financial incentives, and clear line of sight into actual drug costs. The industry is moving toward more transparent models due to state and federal pressures. Our viewpoint is that the regulations should be a floor and not a ceiling on providing true transparency.

The True Value of Transparency for Plan Sponsors

Transparency should be built into the PBM model itself — not treated as an optional reporting feature. It enables plan sponsors to have a clear view of how costs are determined, how services are delivered, and how performance is measured, without relying on opaque practices or pricing systems that obscure the true cost of care.

Transparency Requires Eliminating Spread Pricing

Spread pricing* prevents plan sponsors from seeing the actual cost of medications. It widens the gap between what pharmacies are paid and what plan sponsors are charged, creating incentives that do not align with customer interests.

Removing spread pricing and moving toward new pricing models allows sponsors to see meaningful differences in acquisition cost between PBMs and helps shift discussions toward clinical performance, service reliability, and the overall affordability of care. It also enables network pharmacies to be reimbursed in a more sustainable way. Transparency does not always translate to lower unit costs, but it does provide the ability to develop strategies to achieve lower costs based on the actual economics at various points in the supply chain. Risk Strategies Consulting supports six core tenants that should dramatically improve transparency for plan sponsors as it relates to PBM relationships:

1. Net Cost Must Reflect Actual Cost — Not Estimates

Some plan sponsors now use contracts based on net acquisition cost, supported by disclosure of all PBM revenue sources. This is an improvement, but “net cost” is not consistent across the industry.

Actual acquisition cost can vary by National Drug Code (NDC) and even by lot number, which is a unique identifier code assigned during a specific production cycle. Current adjudication systems cannot accurately calculate these differences at the point of sale. Because of this, transparency requires strong audit and reconciliation processes and not overly simplified tools that suggest a level of precision the system cannot realistically provide.

2. Transparency Must Be Backed by Verifiable Performance Guarantees

Transparency has little value without accountability. PBM contracts should include performance guarantees tied to results — financial, operational, and clinical — and these guarantees must be auditable.

Performance guarantees must also be structured where savings do not depend on denying care or delaying therapy. Contractual models may include administrative or clinical fees, with or without risk sharing, but incentives must reinforce appropriate access and positive outcomes.

3. Outcomes — Not Benchmark Pricing — Should Define Value

As the industry moves towards more Per Member Per Month (PMPM) models, and away from benchmarks like Average Wholesale Price (AWP), Wholesale Acquisition Cost (WAC), Average Sale Price (ASP), and Maximum Allowable Cost (MAC), plan sponsors need guarantees that reflect real performance. Value should be defined by adherence, initiation of therapy, member experience, provider support, driving patients and providers to the lowest net cost, and improvements in health — not the mechanics of a benchmark price.

4. Transparency Reshapes How Rebates Influence Plan Design Strategy

Reducing or eliminating rebate structures will fundamentally change how medications are positioned on formularies. With fewer rebate-driven incentives, decisions are more likely to focus on patient outcomes and clinical effectiveness rather than financial leverage.

Overall benefit value will need to be a key focus during strategy and rate setting. As rebate structures change, it will also require employers to prepare for changes in how funds flow through their benefit designs, as expenditures previously offset by rebates will shift to other areas of the plan. Proper financial modeling is essential and early planning is key.

5. Transparency Reframes the Narrative Around Clinical Management

PBMs are often criticized for clinical interventions, but many of these programs exist to manage cost and ensure appropriate use. PBMs would often profit more by simply processing claims without intervention.

As transparent models and performance guarantees become more common, clinical programs can be evaluated on measurable results, not assumptions about PBM motives.

Conclusion

True transparency is not about increasing the volume of data or reports. It is about aligning incentives, holding stakeholders accountable, and focusing on results that matter to members and plan sponsors. When transparency is paired with clear performance expectations and verifiable outcomes, it supports a pharmacy benefit market built on value, fairness, and trust.

Some of our customers have contracted for true net acquisition costs with full disclosure and attestation by the PBMs of all direct and indirect revenue streams they receive/earn. Our team welcomes further reform and is committed to supporting the evolution of the pharmacy benefit ecosystem.

Our team of pharmacy and clinical specialists provide strategic guidance and insights into the rapid pace of pharmacy and pharmacy benefits. Learn more about Risk Strategies Consulting, part of the Brown & Brown team, here.

*PBM spread pricing is a practice where a pharmacy benefit manager charges a health plan or payer more for a medication than it reimburses the pharmacy, keeping the difference as a source of revenue.