Top Takeaways from Our 2025 Pharmacy Benefits Autopsy – and How Plan Sponsors Should Prepare for 2026

By Antonio Ciaccia, Co-Founder of 46brooklyn Research and President of 3 Axis Advisors

As we close out 2025, it's time to examine what this year revealed about the prescription drug marketplace—and what it means for employers heading into 2026.

I recently joined Scripta Insights for a "pharmacy benefits autopsy" to dissect the year's most significant developments. What emerged wasn't just a story about new drugs or evolving regulations, but rather a clear picture of how deeply embedded conflicts of interest have become in the pharmacy supply chain, and why employers can no longer afford to operate on autopilot.

Here's what 2025 revealed about the true state of pharmacy benefits—and why plan sponsors need to fundamentally rethink their approach.

The Gross-to-Net Bubble Keeps Growing … For Now

If I had to sum up 2025 in one phrase, it would be this: the year of being forced to learn new acronyms in our convoluted prescription drug supply chain. Whether it's IRA, MFN, MFP, MTF, or DTC, I look at it all and say WTF.

But beneath the alphabet soup lies a more fundamental problem: our government continues to apply band-aids to a bloated pricing system rather than prescribing real, system-wide solutions. And while they're creating deals for themselves and their own programs, they're often leaving the commercial marketplace—where most employers operate—to fend for itself.

To understand what happened in 2025, we need to understand our history. Since the early 1990s, when the Medicaid Drug Rebate Program was established, public policy has dictated that there will be massive discounts off the list prices of drugs. The 340B program followed shortly after, and these programs have only expanded over time. Now Medicare has its own mandated rebating scheme too that was created under the Inflation Reduction Act.

What this has meant is straightforward: government programs have given themselves special discounts in the marketplace and created warped incentives where manufacturers don't have meaningful reasons to compete on list prices, but instead compete on discounts.

So where does that leave employers? If manufacturers have little incentive to compete by lowering list prices, employers are left with a marketplace of increasingly inflated prices. The system is designed for you to go through intermediaries—pharmacy benefit managers and now group purchasing organizations—to maximize the rebates you can get.

The challenge? PBMs are not without their own conflicts of interest. While PBMs do a remarkable job at lowering the net cost of medicines for themselves, the rub has always been the degree to which they're passing along that value to their clients and the patients within those plans. This environment of high list prices and the need to secure more and more rebates has made contracting with PBMs to obtain those rebates a necessity for employers, which only increases the power of those large PBMs and their affiliated GPOs to happily shake down those employers at their proverbial toll booth with growing and ever-evolving fees.

To put it plainly, policy and market failures to curtail the growth of prescription drug list prices mean that plan sponsors are stuck on the never-ending hamster wheel of having to pay conflicted actors just in order to achieve some semblance of rational pricing in the market. This forever business model for PBMs translates into forever business costs for employers.

The GLP-1 Wake-Up Call

The GLP-1 phenomenon in 2025 offered employers an unexpected lesson about their PBM relationships. Most employers, fearful of breaking the bank with GLP-1 coverage, took creative approaches: heavier utilization management, emerging vendor solutions, and in some cases like Ohio and North Carolina, going direct to manufacturers rather than working through traditional PBM channels.

Here's what struck me: employers and government programs aren't using PBMs for GLP-1s to the degree they do for other brand drugs. They're looking at carve-out solutions and different models—essentially working around the PBM to find that balance between cost and access.

If you're distrusting of your PBM on GLP-1s, perhaps you should be distrusting of them for everything— not because PBMs are inherently dishonest, but because in an opaque and highly conflicted drug channel, rubber-stamping trust is a one-way ticket to busting your drug budget. The same dynamics that make GLP-1 management concerning apply to your entire portfolio of generic drugs and your very expensive specialty drug portfolio as well.

The Specialty Pharmacy Profit Center

PBMs own specialty pharmacies, and they don't own those pharmacies as charitable endeavors. Research shows that PBM profitability is most proportionally generated in specialty pharmacy. Think about that: the companies you hire to control your specialty drug costs are getting paid by drug companies who produce specialty drugs, own specialty pharmacies where they can set prices, and can steer or force patients to use those pharmacies they own.

A recent study we released examined another layer of vertical integration: private-labeled drug companies owned by PBMs and their insurance company conglomerates. When we examined generic medicines at Quallent Pharmaceuticals and compared them to medicines made by unaffiliated drug companies, Quallent products were almost consistently among the highest prices in the marketplace. For these drugs, Quallent's average wholesale prices (AWPs) were 33 times higher than the lowest AWPs in the marketplace.

And these are generic drugs—in many instances, there are no rebates available to offset those inflated prices.

The Cash Pay Revolution

The emergence of GoodRx, Mark Cuban Cost Plus Drug Company, and independent cash-pay pharmacies like Blueberry Pharmacy and Freedom Pharmacy signals something important: the system doesn't work for everyone. Whether the system "works" in aggregate or not, there are many times where it fails patients completely.

What's fascinating is that employers are now looking at cash-pay options and asking, “Why can't my PBM—supposedly the most leveraged companies in the marketplace—obtain better prices than smaller players like Cost Plus Drugs or tiny independent pharmacies?”

The answer often lies in the specialty drug space, where alternative options are frequently beating legacy PBMs on pricing.

Looking Ahead: What to Expect in 2026

The patterns that emerged in 2025 aren't just historical footnotes – they're accelerating trends that will define the pharmacy benefits landscape in the year ahead. The GLP-1 phenomenon exposed cracks in traditional PBM relationships. The proliferation of private-label arrangements revealed new profit centers. And the rise of cash-pay alternatives demonstrated that the conventional system is increasingly failing to serve its purpose.

For plan sponsors, 2025 was a year of questions. 2026 needs to be a year of action. If you’re an employer reading this, I’m sure you already have some handle on the hot topics that most of your peers and consultants are focused on, but here are three under-the-radar but critical signals every employer should be monitoring closely:

1. PBM Reform and Congressional Action

Congress is actively working on PBM reform, and it matters—not because PBM reform is an end in itself, but because the system relies upon PBM purity to insulate us from increasingly inflated costs. I'm particularly interested in proposals around realigning PBM incentives and price transparency efforts. Employer groups like the National Alliance of Healthcare Purchaser Coalitions, ERISA Industry Committee, and Purchaser Business Group on Health are now at the table advocating for reforms. If you're an employer and not part of these conversations, you should be.

2. Private Label Biosimilars

We're seeing more private label arrangements with products like Humira and Stelara biosimilars, where PBMs and their affiliated companies are taking ownership and setting prices. If your PBM contract guarantees a certain discount off list price, but the PBM is now also setting that list price, you need to think three-dimensionally about your guarantees. Much like we saw with Quallent’s high AWPs on generic drugs, it's like watering down Dad's liquor cabinet—you can give a bigger discount off a price you control while keeping inflated costs cemented underneath your contract terms.

3. 340B Expansion

Many PBM contracts exclude you from getting rebates on 340B-eligible claims. As 340B grows proliferates through contract pharmacy expansion, hospital consolidation, and state legislation, you'll have fewer and fewer claims generating rebates while being stuck paying the full, inflated list prices that no one was ever supposed to pay. Every state legislature is looking at policies that would cement or even grow 340B, directly impacting your rebate savings opportunities.

The Bottom Line: Distrust But Verify

My counsel to every plan sponsor is simple: distrust but verify. Do not trust the autopilot of this system.

Get to know your drug benefits contract. Get to know how your PBM makes money and is incentivized. Get to know your own claims data so well that you dream about it in your sleep (apologies in advance for the nightmares). I can't tell you how many times employers come to me—whether Fortune 100 or mid-size companies—wanting me to look under their hood, only to discover their PBM won't share claims data or restricts access to who can review it.

If you're not getting a full itemized accounting of what your PBM is doing on your behalf or if you're not getting access to your claims data, you do not have a relationship built on trust. Period. Find someone who will give you that data, because you cannot be a prudent fiduciary of your plan without something as basic as claims data access.

The system is one of price discrimination at its core. The same PBM might offer a rotten deal to some plans but a really good deal to others. Your leverage, size, and sophistication are great determinants of whether your best savings opportunity lies with a smaller PBM or perhaps even the legacy big three.

But you'll never know unless you have the data to verify it.

Moving Forward

The path forward requires employers to become more engaged, more skeptical, and more demanding of transparency. The GLP-1 experience of 2025 should serve as a template: when employers don't trust the traditional system, they find creative alternatives and often get better results.

Apply that same scrutiny across your entire pharmacy benefit. Question inflated AWP benchmarks. Examine your specialty pharmacy pricing and utilization trends. Understand where your rebates are—and aren't—coming from. And above all, demand your data.

Because in a system designed around information asymmetry, data is power. And it's time plan sponsors took that power back.

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Antonio Ciaccia is co-founder of 46brooklyn Research, a nonprofit drug pricing research organization, and he is the President of 3 Axis Advisors, a drug supply chain and pharmacy benefits consultancy. He previously led government affairs for Ohio Pharmacists Association and has been instrumental in uncovering hidden drug costs and bringing transparency to pharmaceutical pricing. Learn more at 46brooklyn.com and 3axisadvisors.com.