Why Most Employers Are Sticking with Big 3 PBMs over Alternatives

Key Takeaways

• FTC lawsuits pressured Big 3 PBMs over insulin pricing
• 61% of surveyed employers consider switching from Big 3 PBMs
• Alternative PBMs use fee‑for‑service models, avoiding rebates and spread pricing
• Employers cite cost savings and better service as reasons to switch
• Switching may require formulary changes and could affect employee satisfaction

Pulse Analysis

Regulatory pressure is reshaping the pharmacy‑benefit landscape. The FTC’s 2024‑2025 investigations into insulin pricing and spread‑pricing practices have forced the three dominant PBMs to confront allegations of inflated drug costs and opaque rebate structures. As lawmakers push for greater transparency and potential break‑ups of vertically integrated pharmacy networks, employers are forced to scrutinize the true cost of their prescription drug contracts rather than treating PBMs as a black‑box expense.

Alternative PBMs are capitalizing on this scrutiny by promoting fee‑for‑service pricing that eliminates hidden rebates and spread margins. Companies like AffirmedRx, Rightway, and Navitus present clear per‑prescription fees, allowing benefits teams to see exact spend and adjust formularies accordingly. Early adopters—Purdue University, 7‑Eleven, Tyson Foods, and Eli Lilly—report more predictable pharmacy costs, improved utilization reporting, and the ability to launch wellness programs tied directly to medication data. These pilots suggest that transparent models can deliver measurable savings while enhancing employee health outcomes.

Despite the promise of cost reductions, the transition remains complex. Large employers must weigh potential savings against the operational burden of renegotiating formularies, ensuring generic or biosimilar uptake, and managing employee expectations. Legal and compliance teams are now integral to PBM selection, reflecting heightened fiduciary scrutiny. While the Big 3 retain market share due to their scale and integrated services, the growing appetite for transparency may accelerate a gradual shift toward a more competitive, data‑driven PBM ecosystem.