For health plan officers and financial leaders, pharmacy benefits have crossed a threshold. U.S. prescription drug spending surged to $915 billion in 2025 and is projected to exceed $1 trillion in 2026 — one of the fastest growth rates in two decades. Pharmacy benefits is no longer a cost category — it has become a material driver of financial volatility.
The forces driving this exposure are converging. Specialty medications now account for roughly half of total drug spending, with many therapies exceeding $100,000 annually per patient, and some cell and gene therapies reaching into the millions. Overall healthcare spending is projected to grow 10% or more, with pharmacy costs among the primary drivers. At the same time, the passage of the Consolidated Appropriations Act of 2026 (CAA 2026) has expanded transparency, reporting and fiduciary requirements for health plans — adding regulatory and operational complexity on top of financial exposure.
In one-on-one conversations, I am hearing an acute reaction to mounting pressure being felt across the payer ecosystem. Plan sponsors are increasingly focused on how to maintain cost control while also meeting expanding fiduciary and transparency obligations. Health plans and TPAs are actively exploring more proactive approaches to medical and specialty pharmacy management as usage and cost volatility increase. At the same time, PBMs are working to redefine their role as traditional operating models face greater scrutiny and disruption.
The legacy PBM model was not designed to manage challenges at this scale. It was designed to aggregate volume. The result is a system that is increasingly difficult to measure, interpret, and control, precisely when greater visibility, accountability, and agility are most needed.
The Legacy PBM Model Concentrates Risk in the Wrong Places
The legacy PBM structure systematically limits visibility. Opaque pricing methodologies, hidden rebate structures, and aggregate-only reporting make it difficult for health plans to determine true net cost, validate savings claims, or identify the actual drivers of spending early enough to intervene effectively. Addressing this requires a more transparent operating framework built around integrated data visibility, component-level financial reporting, and greater accountability across pharmacy benefit stakeholders.
Flexibility is equally constrained. Bundled PBM arrangements limit a health plan's ability to adjust benefit design, introduce new strategies, or respond quickly when specialty usage shifts unexpectedly. Fragmented vendors and siloed data eliminate the possibility of a single, reliable source of truth, which is essential for effective financial and operational oversight. More adaptable, modular benefit structures allow plans to introduce targeted specialty management strategies, optimize site-of-care programs, and implement new financial controls without overhauling the entire pharmacy benefit model.
Market concentration compounds the challenge further. The top three PBMs control roughly 80% of U.S. prescription claims, limiting competitive alternatives and slowing adoption of models better suited to the current environment. The practical consequence is a widening gap between what health plans are accountable for and what their current structure actually allows them to manage.
To close these gaps, stakeholders are looking for new models that provide access to broader contracting scale, specialty networks, and integrated management capabilities to maintain greater control over benefit strategy, vendor selection, analytics, and member experience.
A Marketplace Model Approach to Pharmacy Benefits Strategy
Managing pharmacy benefit risk requires the same discipline applied to any significant financial exposure: visibility into the drivers, flexibility to respond, and the ability to make decisions based on empirical data rather than aggregated summaries.
A marketplace-based approach to pharmacy benefits addresses each of these directly. Rather than relying on a single bundled arrangement, health plans can evaluate pharmacy benefit components individually — assessing performance, replacing underperforming elements and aligning each component with specific organizational priorities and financial objectives. The result transforms a monolithic, difficult-to-audit arrangement into a set of discrete, measurable risk factors that can be actively managed and adjusted as market conditions evolve.
The implications are real:
Concentration risk is reduced. Dependence on a single PBM relationship — with its inherent opacity and limited leverage — is replaced by a diversified model in which no single vendor controls the full picture of pharmacy economics. A marketplace model broadens choice and competition, enabling organizations to manage risk based on the profile of their covered lives, not that of the masses.
Regulatory and fiduciary exposure are addressed directly. A marketplace model built on transparent, component-level reporting supports the disclosure, audit trail, and accountability requirements that CAA 2026 and ERISA-aligned fiduciary standards now demand. Plans can demonstrate not just what they spent, but why, and what oversight was applied. Furthermore, real-time access to integrated data enhances the power of predictive modeling and the potential for proactive risk mitigation.
Specialty drug volatility becomes more manageable. A small number of high-cost therapies now account for a disproportionate and increasingly unpredictable share of total spending. A marketplace model makes it possible to coordinate key cost savings components — site-of-care optimization, stronger clinical oversight, and more targeted financial management strategies — within a unified framework designed to intervene where costs are most concentrated. For example, plans may redirect eligible specialty infusions from high-cost hospital outpatient settings to lower-cost ambulatory infusion centers, implement enhanced monitoring protocols for emerging high-cost therapies, or better align pharmacy and medical benefit management strategies to more effectively identify, track and control specialty spending across the continuum of care.
Operational risk from rigidity is eliminated. Currently, when the prescription drug market changes — new therapies enter the market, GLP-1 usage accelerates, or a new cell and gene therapy creates an unanticipated claim event — payers can be slow to react, often having to renegotiate a bundled contract or wait for a vendor partner to build a new capability. A marketplace model enables organizations to act in real time, rather than reactively, as these dynamics unfold. This flexibility enables organizations to rapidly deploy targeted utilization management programs, introduce condition-specific clinical management strategies, expand specialty network access, or adjust financial controls in response to changing market conditions.
From Reactive to Proactive: Data as a Strategic Management Tool
Effective pharmacy benefit management is anticipatory, not retrospective. The legacy pharmacy benefits model is built around periodic, aggregated reporting — a structure designed for billing, not strategic decision-making. A marketplace approach changes the information architecture fundamentally.
With integrated, component-level data and real-time reporting, health plans gain the ability to identify cost drivers earlier, compare vendor performance against benchmarks, and make empirically grounded decisions rather than relying on assumptions embedded in aggregate summaries. This shifts pharmacy benefit management from a reactive posture — responding to spending that has already occurred — to a proactive one, where risk is identified and addressed before it becomes a financial event. Unified analytics also help align pharmacy and medical benefit insights, improving visibility into total specialty care costs and supporting more coordinated enterprise-wide decision-making.
This capability is especially critical as the pace of change in the drug market accelerates. Traditional tools — formularies, rebates, utilization controls — remain important, but they are no longer sufficient as standalone management mechanisms. Precise, real-time visibility into cost drivers and direct operational control over how those costs are managed have become baseline requirements for any health plan operating in today's pharmacy environment.
A Sustainable Framework Requires Structural Change
The structure of pharmacy benefits will continue to evolve as drug acquisition costs remain elevated, new high-cost therapies enter the market, and regulatory expectations increase. Health plans that continue to rely on the legacy model are operating within a framework that often limits visibility and flexibility at the exact moment both are most needed.
Organizations with greater expertise, visibility, and flexibility will be better positioned to adapt to ongoing market disruption, manage specialty cost pressures more effectively, and meet rising stakeholder expectations. Those that fail to evolve risk operating within a pharmacy benefit framework that is increasingly misaligned with the financial, regulatory, and operational realities of today's healthcare market.
An adaptable, marketplace-driven pharmacy benefit model enables health plans and payers to adapt to these realities without major structural disruption or service interruption. It replaces opacity with transparency, rigidity with modularity, and assumption-based management with data-driven oversight.
Executing this kind of transition requires more than a vendor swap — it requires a new paradigm and a strategic partner with the clinical, financial, and operational depth to navigate this environment. Collaborating with specialized pharmacy benefit partners — those with proven capabilities across specialty management, analytics, rebate optimization, and benefit design — can help plans build a more responsive and sustainable pharmacy benefit strategy.
