What employers should ask, avoid, and demand from PBMs in 2026: A practical guide to lower drug costs and improve transparency
Key takeaways:
- Pharmacy benefit transparency is critical in 2026 as rising drug costs continue to impact employers and employees.
- Many traditional PBMs rely on hidden fees, spread pricing, and confusing rebate structures that increase costs without employers realizing it.
- Employers should avoid red flags like non-disclosure agreements, rebate games, poor reporting tools, and hidden fees.
- Non-negotiables for any PBM contract include 100% rebate passthrough, transparent pricing, flat fees, full claims data access, and regular savings reviews.
- Companies that switch to transparent PBMs or Pharmacy Benefit Solutions providers typically see 15% to 25% savings in the first year.
- Intercept Rx’s Rx Optimization Program offers employers a solution with $0 copays, home delivery, and member advocacy.
- This guide is a practical tool to help employers make informed decisions during contract renewals, vendor reviews, or new partnerships in 2026.
Introduction: Why pharmacy benefit transparency matters now more than ever
Prescription drug costs continue to rise, putting more pressure on employers and their employees. Many companies are realizing that the way pharmacy benefits are managed can make a big difference not just in costs, but also in the health and satisfaction of their teams.
A major reason behind the high costs is the lack of transparency in how traditional Pharmacy Benefit Managers (PBMs) operate. Hidden fees, confusing rebate structures, and unclear contracts make it hard for employers to understand what they are truly paying for.
In fact, a recent report shows that more than 70% of employers believe that the lack of transparency from PBMs directly drives up healthcare costs.¹
This guide is designed to help employers take control. It offers clear steps on what questions to ask, what red flags to avoid, and what demands to make when working with PBMs. It also introduces a better way forward: moving beyond traditional PBMs to Pharmacy Benefit Solutions, like Intercept Rx, which is designed to lower costs while improving the member experience.
If employers want to protect their bottom line and support their employees, understanding pharmacy benefit transparency isn’t just important, it’s essential.
Understanding PBM transparency: Key concepts defined
Pharmacy benefits can be confusing. Many employers aren’t fully aware of how traditional PBMs make money or how costs are passed on to them. Understanding a few key terms can help companies avoid overpaying and find better solutions.
Common practices that hurt employers
- Spread Pricing: This happens when a PBM charges an employer more for a drug than it pays the pharmacy, keeping the difference as profit. Employers rarely know this is happening because it’s hidden in the contract.
- Rebate Passthrough: Some PBMs collect rebates from drug manufacturers but don’t fully pass them back to employers. Instead, they keep part (or all) of the rebates as profit.
- Gag Clauses: Certain PBM contracts prevent pharmacists from telling patients if a medication would be cheaper if they paid cash instead of using insurance.
- Poor Formulary Design: Some PBMs design drug lists (formularies) to favor medications with higher rebates, not necessarily the most effective or affordable drugs for employees.
Traditional vs. Transparent PBMs
- Traditional PBMs often operate with hidden fees, confusing rebate structures, and unclear pricing models. Employers may never fully know how much the PBM is profiting from their plan.
- Transparent PBMs, or Pharmacy Benefit Solutions providers, operate differently. They offer clear, simple contracts, pass 100% of rebates back to the employer, and eliminate spread pricing. Employers know exactly what they are paying for, with no hidden costs.
A Better Model: Pharmacy Benefit Solutions
Intercept Rx believes that the old PBM model is broken. Instead of acting like middlemen, Pharmacy Benefit Solutions providers focus on full transparency, flat fees, open data access, and member advocacy. This model helps employers control pharmacy costs while giving employees better access to the medications they need.
What to avoid: Red flags in pharmacy benefit contracts
Not all PBMs are created equal. Many still use tactics that drive up costs for employers while limiting visibility into how money flows through the plan.
Knowing the red flags can help companies avoid bad deals and costly surprises.
· Non-Disclosure Agreements (NDAs) and “Black Box” Pricing
If a PBM refuses to share how much they pay pharmacies or what rebates they collect, that’s a major warning sign. This is often called “black box” pricing, meaning the employer has no idea what’s happening behind the scenes.
· Rebate Games and Opaque Discount Guarantees
Some PBMs promise savings through “discount guarantees,” but those guarantees are often based on inflated drug prices. Others play rebate games, keeping part of the manufacturer rebates instead of passing them back to the employer. These tactics can look like savings on paper but often cost more in the long run.
· Poor Data Access or no Reporting Tools
Without real-time data or clear reports, employers can’t monitor how their pharmacy benefits are performing. If a PBM doesn’t provide transparent reporting dashboards, it’s a sign they may be hiding something.
· Hidden Fees
Watch for other surprise costs buried deep in the contract. These small fees add up fast and often go unnoticed until the costs become overwhelming.
Employers deserve better. Avoiding these red flags is the first step toward choosing a pharmacy partner that’s focused on savings, transparency, and employee well-being not hidden profits.
What to demand: Non-negotiables for 2026 pharmacy benefit contracts
When it comes to pharmacy benefits, employers don’t have to settle for confusing contracts or hidden fees. There are clear, fair standards that every PBM, or better yet, every Pharmacy Benefit Solutions provider, should meet. These are the non-negotiables for any employer focused on lowering costs and protecting their employees in 2026 and beyond.
· 100% pass-through of all rebates and discounts
Employers should demand that every rebate, discount, and incentive from drug manufacturers be passed directly back to the plan without exception. If a PBM keeps any portion, that’s money coming out of the employer’s pocket.
· Member advocacy and clinical transparency
A modern pharmacy partner should focus on more than savings. Employers should expect member advocacy, where the PBM helps employees find the most affordable, effective medications. Clinical transparency means making decisions based on what’s best for the patient, not what earns the PBM the highest rebate.
· Flat administrative fees, not percentage-based
PBMs should charge a simple, flat fee for managing the plan. Avoid contracts where the PBM earns a percentage of total drug costs, which creates an incentive for costs to rise instead of fall.
· Annual or quarterly savings reviews
Employers should require regular performance reviews, quarterly or at least once a year. This ensures that the PBM is meeting savings goals and sticking to the contract terms.
By setting these clear expectations, employers can partner with a pharmacy benefit provider that truly works in their best interest, one that prioritizes savings, transparency, and employee health.
Real-world examples: Transparent vs. Non-Transparent PBMs
The difference between a transparent pharmacy benefit partner and a traditional PBM is more than just words, it’s real savings, better service, and improved outcomes for employees.
· The cost of Non-Transparent PBMs
When employers work with traditional PBMs, costs often go up instead of down. Hidden fees, spread pricing, and rebate games quietly increase pharmacy expenses. Employers are left paying more while having little visibility into where their money is actually going.
· The Transparent PBM advantage
Employers that switch to a transparent PBM or a Pharmacy Benefit Solutions provider often see major improvements. On average, companies experience pharmacy cost reductions of 15% to 25% within the first year. The savings come from eliminating spread pricing, passing 100% of rebates back to the employer, and removing hidden fees.
· Intercept Rx in action
With Intercept Rx’s Rx Optimization Program, employers unlock a new level of savings. The program delivers:
- $0 copays for employees.
- Convenient home delivery
- A dedicated member advocacy team that helps employees navigate their medications and find lower-cost alternatives.
This is more than a PBM, it’s a true Pharmacy Benefit Solution built for employers who are ready to take control of their healthcare costs.
Learn more about how Intercept Rx helps employers optimize pharmacy benefits.
Free Bonus Checklist: Your 2026 Pharmacy Benefit Transparency Evaluation Tool
Choosing the right pharmacy benefit partner doesn’t have to be overwhelming. This simple checklist is designed to help employers quickly evaluate whether a PBM or Pharmacy Benefit Solutions provider is truly transparent or just claiming to be.
Use this checklist during contract reviews, renewals, or when considering a switch.
👉 Click HERE to download the full PDF version of this checklist and bring it to your next PBM negotiation or renewal meeting. It can help uncover hidden costs and ensure your pharmacy benefits are built for transparency, savings, and employee well-being.
About Intercept Rx: Redefining PBMs for the modern employer
Intercept Rx is not a traditional Pharmacy Benefit Manager (PBM). It is a Pharmacy Benefit Solutions provider built to serve self-funded and level-funded companies that are ready for a better way to manage pharmacy benefits.
The company’s approach is simple: full transparency, no hidden fees, and a focus on real savings. Through the Rx Optimization Program, Intercept Rx delivers:
- $0 copays for employees on many medications.
- A dedicated member advocacy team that supports employees in finding the most affordable and effective medication options.
Intercept Rx believes pharmacy benefits should be easy to understand, affordable for employers, and supportive of employee health. This is more than a PBM, it’s a smarter solution for companies that want control, clarity, and savings.
Final Thoughts: Setting a new standard for 2026
Employers deserve more from their pharmacy benefit partners. Transparent pricing, honest contracts, open data, and real savings shouldn’t be optional they should be the standard.
For too long, traditional PBMs have profited from hidden fees, confusing contracts, and rebate games that drive costs up. But employers now have the power to change that by demanding better.
This guide is designed to help employers make smarter choices. Whether you’re reviewing your current pharmacy benefit contract, going through a renewal, or searching for a new partner, use this guide as your roadmap. Ask the right questions, spot the red flags, and demand the non-negotiables that protect your business and your employees.
The future of pharmacy benefits is transparent, fair, and built around the needs of employers and their teams. And that future starts now.
