Pharmacy benefit costs now account for 25% of healthcare spending and are projected to increase by 12% nationally through 2027. Meanwhile, the public sector in the Northeast is facing significantly higher trends of 18% to 20%. These unprecedented numbers are being largely driven by the skyrocketing use of GLP-1s, oncology medications, and increased usage of high-cost specialty drugs.
The PBM Gamble: Enticing Rebates, Hidden Risks
Despite these alarming trends, many plan sponsors remain in traditional self-funded arrangements with limited stop-loss coverage. Why? Because rebates continue to be the carrot these PBMs dangle in front of plan sponsors with promises of substantial money to offset their claims. The reality? Plan sponsors end up blowing through their fiscal budget, especially in the first year when they only receive two rebate payments. The cause? Because PBMs are not financially responsible for actual pharmacy costs, they often rely on projected rebates, discounts, and clinical program performance savings to support their cost projections. When those savings fall short, the financial risk remains with the plan sponsor.
Do those same PBM’s guarantee actual claim dollars? Unfortunately, no. Here’s what’s really happening:
- PBMs drive up rebate values by directing members to higher cost brand and specialty drugs. So yes, the rebates sure do look enticing, but those rebates are built off the back of tentative guarantees and off claims where higher rebates do not result in the lowest net cost to the plan sponsor.
- Empty promises claiming 20% savings through “clinical programs” or “better network pricing” are easy to make when there are no guarantees or validation of such savings. The reality is that even if some PBMs guarantee clinical savings on their program, they still don’t have any financial responsibility to guarantee the plan sponsor’s actual claim costs for the given contract year. The plan sponsor bears that risk.
- Rebate payments won’t be enough to offset plan sponsor claim spending. The first quarterly rebate payment in a traditional self-funded arrangement won’t be paid to plan sponsors until 120-150 days after each calendar year quarter closes, potentially resulting in only one to two rebate payments in the first year. Additionally, these PBM’s may identify several financial caveats in their proposals which can greatly reduce the guaranteed value of the rebate payments, such as federal and state regulatory requirements that impact rebates like the Inflation Reduction Act, an increase in biosimilar products to the marketplace, most favored nation pricing, etc.
Stop Rolling the Dice
In light of increasing cost trends, traditional PBM’s turn to contract transparency. In contrast, Benecard offers price transparency. The plan sponsor knows their spend exactly, no guess work, no projections, and no rolling the dice. Our unique funding arrangement is fully aligned with plan sponsors’ financial and budgetary goals.
Benecard’s Fixed-Rate Program Includes:
- 100% risk protection – Plan sponsors pay nothing more than their monthly fixed rate, no matter how high claims may exceed those charges. There is no “true-up” or reconciliation either.
- Return-of-savings program – Plan sponsors receive 100% of savings when claims perform better than expected (meaning Benecard’s margin of return is capped).
- Upfront rebates – 100% of our rebates are floated and factored into our fixed guaranteed monthly program charges starting in month one, giving plan sponsors an upfront cash flow advantage other PBMs can’t offer.
- Solutions that work for clients – Plan sponsors retain 100% autonomy of their plan design & benefits.
Ready to Learn More?
Watch our video to learn how our fixed-rate prescription benefit program provides the best way to take the risk out of pharmacy benefits.
In today’s pharmacy landscape, managing benefit costs shouldn’t be a gamble. Let us show you how Benecard’s proven approach can help plan sponsors beat the odds, control costs, and achieve greater budget certainty. Reach out to talktous@benecard.com to start the conversation.
Sources:
2027 Employer Healthcare Strategy Survey: Executive Summary: https://temp.businessgrouphealth.org/resources/2027-employer-healthcare-strategy-survey-executive-summary
2026 Milliman Medical Index: https://media.milliman.com/v1/media/edge/images/millimaninc5660-milliman6442-prod27d5-0001/media/Milliman/PDFs/2026-Articles/2026_Milliman-Medical-Index.pdf
Other Benecard Articles: If you enjoyed reading this article you might like to check out this one: https://www.benecard.com/get-the-whole-picture-on-level-funding-look-at-the-advantages-and-limitations/
