Pharmacy benefit reform isn’t a future debate. It’s today’s reality. In 2024, 20 states passed 33 bills related to pharmacy benefit managers (PBMs). This year, every state has stepped in, introducing more than 1,250 PBM or prescription drug benefit bills that target spread pricing, rebate transparency, pharmacy ownership and more.
It’s no wonder many employers feel overwhelmed by the staggering pace of pharmacy benefit reform. I’ve spoken with HR leaders and benefits managers who ask the same three questions:
- How do we keep our plans compliant?
- How do we safeguard budgets?
- How do we make sure employees can afford their medications?
Those are the right questions. Although reform may be complex, your responsibility to protect your people, budget and bottom line is simple.
Why reform is accelerating
- Costs are climbing faster than any other benefit. Employer spending on pharmacy benefits rose 7.7% in 2024 after increasing by 8.4% in 2023. Driven by soaring demand for GLP-1 medications and the skyrocketing cost of specialty drugs, this is the steepest rise in any health benefit line item.
- Employees are paying the price. Out-of-pocket costs and pharmacy access issues erode trust in benefits. If your employees can’t get their prescriptions filled when and where they want to, the benefit fails at its most human level.
- Policymakers are responding. In Illinois, Governor J.B. Pritzker spotlighted Chicago Pride Pharmacy to show how PBM practices threaten independent pharmacies and the communities they serve. Florida now requires 100% rebate pass-through. Arkansas has banned PBMs from owning pharmacies. This is not an abstract policy move; access to local pharmacies has been proven to improve health outcomes.
- Market dominance is under scrutiny. The six largest PBMs control 95% of U.S. prescription claims, and the Federal Trade Commission found the top three generated $7.3 billion in excess revenue by marking up specialty drugs at their own pharmacies. This kind of extreme vertical integration puts profits ahead of patient care, and legislators are looking for solutions to restore fair practices to the market.
Three takeaways for employers
- Don’t wait for legislation. Statehouses are moving fast, and laws like Florida’s pass-through mandate are already effective. If your PBM isn’t nimble, find one that is.
- Know your contract. Offering “100% pass-through” doesn’t mean much if it’s not defined. Audit rights, change-in-law protections and annual market checks should be included in PBM agreements.
- Lead with people. ERISA calls it fiduciary duty; I call it doing right by your employees. That means ensuring savings flow back to your plan and that employees aren’t saddled with unnecessary out-of-pocket costs.
Moving from uncertainty to confidence
It’s easy to stand by and let the dust settle, but leaders shouldn’t wait to be told what reform means. Set the agenda for your people with this PBM Reform Readiness Checklist. The 10-minute exercise will help you spot gaps in your PBM contract, forecast the financial impacts of reform and protect access and affordability for your employees.
1. Do you have full visibility into your PBM’s drug pricing? This is necessary to avoid inflated pricing and compliance issues.
2. Is your PBM committed to transparent, pass-through rebates? Many reforms focus on hidden rebates that incentivize PBMs to promote the most expensive drugs and exclude cost-effective alternatives to maximize their own profits.
3. Are administrative fees clear and predictable? Transparent administrative fees give you more control over your costs.
4. Do you receive actionable, real-time data and reporting? Timely insights empower you to make informed decisions and meet fiduciary standards.
5. Does your PBM own retail, mail or specialty pharmacies? Multiple bills are aimed at stopping vertical integration due to the conflicts of interest it creates.
6. Are specialty drug costs proactively managed? Without proper oversight, expensive specialty medications can implode budgets.
7. Are there clear programs to support appropriate GLP-1 use and increase biosimilar adoption? With roughly 9% of the U.S. population predicted to take GLP-1s by 2030, proactive strategies are needed to manage the use of these costly drugs without disrupting care.
8. Does your PBM support evolving state-level compliance needs? With a ballooning number of patchwork state laws, this is especially critical for multistate employers.
9. Does your PBM act as a fiduciary partner? Not acting in your employees’ best interest is a violation of ERISA requirements.
10. Is their technology built to simplify, not complicate your job? These tools should facilitate quick and confident decision-making.
11. Do they tailor programs to your people—not just industry templates? Personalized plans help reduce costs and deliver what your workforce really needs.
12. Do they provide high-touch, responsive support for clients and members? Your employees deserve transparency and compassion when they have questions about their benefits.
Reform is moving fast. But with the right clarity — and the right PBM partner — you can move faster.
Elisa Muller is the Vice President of Legal and Chief Compliance Officer of LucyRx, an independent, next-generation pharmacy benefit manager redefining prescription care. An experienced attorney with deep expertise in health law—particularly in the PBM and pharmacy industries—she serves as a strategic and trusted business partner, advising on regulatory compliance, complex health care transactions, and contract negotiations.
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