By Josh Pirestani
For independent pharmacy owners, pharmacy benefit manager reform often appears to be a Washington problem. Federal agencies investigate. Congress holds hearings. State legislatures debate bills. Trade groups submit comments. Meanwhile, pharmacy owners still have to decide which contracts to accept, which claims to fill, how to preserve cash flow, and how to explain access problems to patients and local employers.
That gap between policy debate and pharmacy operations is where much of the real work now sits. Public policy matters, and recent federal scrutiny has created a stronger evidence base. But independent pharmacies, employers, consultants, and healthcare executives do not have to wait for every federal reform question to be settled before acting. They can begin with contracts, documentation, data rights, purchasing standards, and transparent benefit models.
The practical question is no longer whether PBMs deserve scrutiny. The Federal Trade Commission, Centers for Medicare & Medicaid Services, Government Accountability Office, JAMA, and NCPA have all documented pieces of the market reality. The question for pharmacy and employer leaders is what can be done now with the evidence already available.
PBM Market Concentration Is Now Part of the Operating Environment
PBMs are not simply back-office claims processors. They influence formularies, pharmacy networks, reimbursement, specialty access, plan design, data reporting, and how patients experience the prescription benefit. When a market function with that much influence is concentrated, pharmacy owners need to treat it as a strategic business condition, not only a policy concern.
The FTC’s July 2024 interim staff report stated that the top three PBMs processed nearly 80 percent of approximately 6.6 billion prescriptions dispensed by U.S. pharmacies in 2023, and that the top six PBMs processed more than 90 percent. A 2024 JAMA study analyzing retail prescriptions found that the top five PBMs accounted for 83.5 percent of retail prescriptions overall in 2023, with concentration varying by payer type.
Those numbers matter because an independent pharmacy’s daily operating decisions are shaped by the payer and PBM environment. Reimbursement terms, claim adjudication, network access, pharmacy performance terms, and specialty dispensing rules can determine whether volume is profitable, neutral, or harmful. A busy pharmacy can still be financially strained if too much of its volume is tied to contracts that do not support sustainable dispensing or clinical service delivery.
The FTC also emphasized vertical integration. In plain terms, many large PBMs are connected to insurers, pharmacies, specialty pharmacies, or broader healthcare companies. That does not mean every integrated arrangement produces the same result. It does mean pharmacy owners and employers should ask whether a benefit design is neutral, auditable, and aligned with patient access, or whether it creates incentives that favor affiliated channels.
Why Legislative Reform Moves Slowly
PBM reform is complicated because PBMs operate across several legal and commercial systems at once. Medicare Part D, Medicaid managed care, commercial insurance, self-funded employer plans, state insurance regulation, pharmacy contracting, antitrust enforcement, and federal benefit rules all intersect. A state law may affect one segment of the market while leaving another untouched. A federal rule may improve transparency in one program without changing every private contract. For related planning context, see these PBM strategy resources. Related reading: reimbursement visibility.
CMS has addressed one important payment issue in Medicare Part D. In its CY 2023 Medicare Advantage and Part D Final Rule, CMS explained that negotiated prices were often higher than final payments to pharmacies because of pharmacy price concessions. CMS finalized a policy redefining negotiated price as the baseline, or lowest possible, payment to a pharmacy, effective January 1, 2024.
That policy change shows why reform often moves through technical definitions, payment mechanics, and program-specific rules. These details may not make headlines, but they shape patient cost-sharing, pharmacy reimbursement, and the transparency of the transaction. For pharmacy owners, the lesson is clear: reform is not only about broad political statements. It is also about the exact language used in contracts, plan documents, reimbursement schedules, audit clauses, and data files.
The GAO’s 2019 Medicare Part D report also illustrates the complexity. GAO found that Part D plan sponsors used PBMs to provide 74 percent of drug benefit management services in 2016, and that PBMs earned revenue through volume-based fees, per-member-per-month fees, or a combination. GAO also described rebate and price concession flows in Part D. The report is a reminder that PBM reform requires attention to revenue models, not only reimbursement complaints.
What Pharmacies Can Do Today
Independent pharmacies cannot control every policy timeline, but they can control the quality of their own evidence. The first action is to document reimbursement and access problems with discipline. Owners should track below-cost claims, payment timing, audit activity, patient steering, network restrictions, high-cost inventory exposure, and recurring payer issues. That record should identify the plan, PBM, drug, claim date, acquisition cost, reimbursement, patient impact, and any follow-up required.
Documentation changes the conversation. A general statement that reimbursement is unsustainable may be true, but a structured record of losses and access problems is more useful in discussions with employers, consultants, policymakers, associations, and legal advisors. It also helps owners decide which contracts, therapies, and workflows require special review.
Second, pharmacies should build a margin review process. The 2024 NCPA Digest reported that independent pharmacy gross profit margin fell to 19.7 percent, the lowest point in the report’s 10-year lookback window. NCPA attributed pressure to factors including low or below-cost third-party reimbursements and inflation affecting wages and overhead. Pharmacy owners should not wait for year-end financials to find out which segments of the business are eroding margin.
Third, pharmacies should communicate with local employers in practical terms. Employers may not understand how plan design affects pharmacy access in their own community. A pharmacy owner can explain how narrow networks, specialty restrictions, mail-order incentives, and reimbursement terms affect patients without turning the conversation into a political debate. The best employer-facing message is specific: here is how your plan design affects access, service, adherence support, and local pharmacy sustainability.
What Employers Can Do Today
Employers, especially self-funded employers, are not passive observers. They purchase the benefit, hire advisors, select vendors, and approve renewal terms. Many employers do not need to become PBM experts, but they do need a process for asking better questions before renewal.
An employer can ask whether the PBM arrangement includes spread pricing, whether rebates and other price concessions are passed through, how administrative fees are disclosed, whether affiliated pharmacies are treated differently from unaffiliated pharmacies, whether claims-level data are available, and whether the employer has audit rights. These questions are not ideological. They are ordinary governance questions for a major healthcare spend category.
Employers should also ask their consultants how they are compensated. If a consultant is evaluating PBM options, the employer should know whether any compensation comes from the vendors being recommended. A transparent advisory process is essential if employers are expected to compare legacy PBM models with pass-through, fiduciary, or transparent alternatives.
Benefit design should also be evaluated for patient access. Independent pharmacies often provide immunizations, medication therapy management, blood pressure monitoring, compounding, long-term care support, and other services. NCPA’s 2024 Digest reported high levels of clinical and community service activity among independent pharmacies. Employers should understand whether their network design supports or weakens access to those local services.
The Role of Fiduciary and Transparent Models
Transparent PBM and fiduciary models should be evaluated by contract terms, not slogans. A model that claims to be transparent should define how it is paid, how rebates are handled, how pharmacy reimbursement is calculated, what data the employer receives, and what audit rights exist. A fiduciary model should specify the duty owed to the plan sponsor and participants, and the contract should make that duty operational.
The FTC’s January 2025 second interim staff report focused on specialty generic drugs and found that affiliated pharmacies of the Big 3 PBMs generated more than $7.3 billion of dispensing revenue in excess of NADAC from the analyzed specialty generic drugs over the study period. That finding does not answer every question about every PBM contract, but it does show why employers and pharmacies should insist on visibility into pricing, reimbursement, and affiliated-channel incentives.
For pharmacies, transparent models may offer a more understandable reimbursement environment, but they still require careful review. For employers, the value is not simply that a model sounds different from a traditional PBM. The value is whether the employer can verify the financial arrangement, audit performance, and understand how plan design affects patients and pharmacies.
Practical Actions Readers Can Take
Pharmacy owners should begin by building a PBM impact file. Include below-cost claims, audit correspondence, patient access issues, network exclusion examples, high-cost drug cash-flow exposure, and documentation of staff time spent resolving preventable payer problems. Review this file regularly and use it to guide contract decisions, employer conversations, and association advocacy.
Owners should also create a monthly margin and contract review. Identify which plans, drug classes, and workflows create the greatest risk. Use that review to decide when a prescription requires owner-level review, when staff need a decision tree, and when a payer relationship deserves escalation.
Employers should require a pre-renewal PBM review that covers rebate treatment, spread pricing, specialty pharmacy rules, affiliated pharmacy incentives, data access, audit rights, consultant compensation, and network adequacy. The review should compare total plan cost, participant cost, and access to local pharmacy services, not just headline discounts.
Consultants should document how PBM recommendations are evaluated and disclose compensation clearly. Healthcare executives should treat pharmacy benefits as a governance issue that deserves the same discipline as other major healthcare vendor relationships.
For related Dispense Times coverage and operational context, readers can continue with the Business and Operations sections.
Conclusion
PBM reform will continue to involve federal agencies, Congress, state regulators, courts, and public programs. That work is important. But pharmacies and employers should not treat reform as something that only happens after a law changes.
The next stage of PBM reform is also happening in contract reviews, renewal meetings, employer governance, pharmacy documentation, transparent benefit models, and local conversations about patient access. Independent pharmacies that understand their numbers and communicate their value clearly will be better prepared. Employers that demand disclosure, auditability, and access-focused network design can influence the market before the next policy cycle concludes.
For pharmacy owners, the message is practical: keep following the policy debate, but do not wait for it. Build the evidence. Know the contracts. Talk to employers. Evaluate transparent models carefully. Protect patient access with facts, not frustration. That is where meaningful change can begin today.
Sources
- Federal Trade Commission, Pharmacy Benefit Managers: The Powerful Middlemen Inflating Drug Costs and Squeezing Main Street Pharmacies, July 2024
- Federal Trade Commission, Specialty Generic Drugs: A Growing Profit Center for Vertically Integrated Pharmacy Benefit Managers, January 2025
- U.S. Government Accountability Office, Medicare Part D: Use of Pharmacy Benefit Managers and Efforts to Manage Drug Expenditures and Utilization, August 2019
- Centers for Medicare & Medicaid Services, CY 2023 Medicare Advantage and Part D Final Rule, April 29, 2022
- JAMA, Pharmacy Benefit Manager Market Concentration for Prescriptions Filled at US Retail Pharmacies, September 10, 2024
- National Community Pharmacists Association, 2024 NCPA Digest Report, October 27, 2024
Readers tracking contracts, payer pressure, and policy changes can use the PBM reform resources for related reporting, tools, and owner-focused next steps.
