4 hidden costs that undermine pharmacy cost savings plans for companies.

Organizations often feel forced to accept rising pharmacy costs, unsure of what's driving them or how to stop the bleeding. Many trust their pharmacy benefits managers (PBMs) to keep spending in check, yet despite promises of savings, costs keep climbing.

Traditional PBMs are a big reason those costs keep climbing. Hidden fees, lack of transparency, and profit-driven practices are built into their models, so they profit at your expense. While they claim to reduce costs, they're often the ones driving them up. Here are four ways traditional PBMs take advantage of your team, and how to stop overpaying.

Key highlights:

• PBMs manage employer prescription drug plans by negotiating drug prices, processing claims, and setting which drugs are covered.
• Traditional PBMs inflate employer drug spend through spread pricing, rebate retention, specialty drug mismanagement, and vertical integration.
• Rightway's neutral, pass-through PBM removes these hidden costs with transparent pricing and clinically led care navigation.

How traditional PBMs affect employer pharmacy benefits.

Prescription drug coverage runs on a formulary and copay tiers. Employers hire a pharmacy benefit manager (PBM) to manage it. The PBM negotiates drug prices, processes claims, sets the formulary, and chooses where members can fill prescriptions.

Those pricing, formulary, and network decisions determine what employers pay and which drugs employees can access. Traditional PBMs use them to earn money from spreads, rebates, and the pharmacies they own, so their revenue grows as your drug spend grows. That spend is already rising fast. Employers expect drug costs to climb 12% in 2026, faster than overall healthcare costs, according to the Business Group on Health.

4 sources of hidden waste in your pharmacy benefit.

The hidden waste in your pharmacy benefit rarely shows up as a line item on an invoice. It sits in contract definitions, pricing terms, and pharmacy networks that most employers never see in full, so a plan can overpay for years without noticing. Each practice here moves money from your plan to the PBM, and each one has a fix you can build into your next contract or renewal.

1. Spread pricing.

Traditional PBMs use a tactic called spread pricing, where they charge an employer more for a drug than they pay the pharmacy, and pocket the difference. For example, the PBM might pay a pharmacy $100 for a drug but bill your plan $150, keeping the $50 “spread” as profit.

Spread pricing incentivizes the PBM to maximize the spread, meaning employers and employees end up paying much more than necessary for their prescriptions. What’s worse, spread pricing is rarely disclosed, making it difficult to know just how much extra you're being charged. Further, traditional PBMs know that employers and government agencies are looking into spread pricing, so they have been finding new ways to hide these practices.

To avoid the impacts of spread pricing, it’s essential to work with a pharmacy benefits manager who uses a pass-through, transparent PBM model. In this model, all savings are passed directly to the plan; what you pay for a drug is the same as what the PBM pays the pharmacy. Regularly auditing your PBM’s pricing and reimbursement practices can help ensure compliance and reveal tactics like spread pricing.

2. Rebate retention.

PBMs present rebates as savings, but rebates reward PBMs for favoring higher-cost drugs. Manufacturers pay larger rebates on pricier drugs, so your plan's net cost stays high even when a cheaper drug works just as well.

• Formulary bias: PBMs favor drugs with the largest rebates, even when those drugs offer no added clinical benefit.
• Rebate guarantees: PBMs promise employers a set rebate amount, then push more expensive drugs to reach it.
• Brand over generic: PBMs prefer a brand-name drug over a generic alternative when the rebate is larger, so your plan pays more even after the rebate.

To stop rebate-driven cost inflation, choose a PBM that passes 100% of rebates back to the plan and builds the formulary on clinical value, not rebate size. That keeps your plan focused on the lowest net cost instead of PBM profit.

3. Specialty drug mismanagement.

Specialty pharmacy makes up a small share of prescriptions but accounts for 50% of U.S. drug spending, according to the U.S. Department of Health and Human Services. Few rules define what counts as a specialty drug, and traditional PBMs use that gap to label more medications as specialty. The label lets them route prescriptions to specialty pharmacies they own and skip the clinical review that would flag a lower-cost option.

To control this cost driver, your PBM's specialty pharmacy management should include tight utilization management and regular prescription reviews. Those reviews should move members to lower-cost alternatives, such as biosimilars and generics, when they're clinically appropriate.

4. Vertical integration.

PBMs should negotiate the best prices for employers and keep medications affordable for members. When a PBM owns the pharmacies it sends members to, that role turns into a conflict of interest. The PBM earns more by steering members to its own mail-order or specialty pharmacies, even when cheaper or more convenient options exist.

To avoid these costs, review your contract for incentives tied to PBM-owned pharmacies, or choose a PBM with no conflicts of interest. Let employees fill prescriptions where they choose, whether retail, mail-order, or specialty, so cost and convenience drive the decision instead of the PBM's bottom line.

Pharmacy benefits don't have to keep expanding your budget. Rightway's transparent and fully aligned PBM model eliminates hidden fees and operates with full transparency, so you lower costs while improving health outcomes for your team.

How to build pharmacy cost savings plans for companies.

Cutting pharmacy waste starts with knowing where your money goes. Your contract, claims data, and plan design show whether your PBM is working for your plan or for its own margin. If these steps turn up spread pricing, retained rebates, or pharmacy steering, that's a sign it's time for a different PBM.

Work through these four steps to find and stop the waste in your plan:

1. Audit your PBM contract for spread pricing and rebate caps.

Your contract defines what the PBM can keep. Check these terms first:

• Pricing: Confirm your plan pays what the pharmacy receives, with no spread.
• Rebates: Watch for a narrow rebate definition that lets the PBM keep other manufacturer payments.
• Guarantees: Flag fixed-dollar rebate guarantees, since the PBM keeps everything above them.
• Audit rights: Secure the right to audit claims every year.

Read our guide to transparent PBM contracts for the language to request.

2. Request claim-level data to benchmark what you pay per drug.

Summary reports hide per-drug pricing. Ask your PBM for claim-level data that shows, for every fill:

• Plan cost: What your plan paid.
• Pharmacy reimbursement: What the pharmacy received.
• Drug and quantity: Which drug, how much, and for how many days.

Compare what your plan paid per drug against the Centers for Medicare & Medicaid Services (CMS) National Average Drug Acquisition Cost (NADAC) to spot overpayments, a core step in pharmacy cost management.

3. Require clinical review of specialty drug prescriptions.

Specialty drugs drive the largest share of drug spend, so they need the closest review. Ask your PBM to have pharmacists check each new specialty prescription for medical necessity, correct dosing, and a lower-cost option such as a biosimilar or generic.

Pharmacist review of specialty prescriptions is one of the most effective high-cost drug strategies for employers. It catches unnecessary or overpriced fills before your plan pays for them.

4. Remove incentives that steer members to PBM-owned pharmacies.

Check your plan design for rules that favor the PBM's own pharmacies:

• Mandatory mail order
• Lower copays only at PBM-owned locations
• Exclusive specialty pharmacy networks

Drop the mail-order mandates, PBM-only copay discounts, and exclusive specialty networks, and set the same copay at every in-network pharmacy. Members then choose based on cost and convenience, and your plan pays the lower price.

What to look for in employer prescription benefit solutions.

Spread pricing, retained rebates, and pharmacy steering all trace back to how a PBM makes money, so the right employer prescription benefit solution starts with an aligned business model. Compare PBMs on the six areas that set your net drug cost: pricing, rebates, formulary, specialty drugs, pharmacy network, and reporting.

Fix the problems with pharmacy benefit managers through Rightway.

Rightway's transparent PBM is neutral and pass-through by design. Our only revenue is one flat admin fee, so we earn nothing from higher drug prices. Here's how our model removes each hidden cost:

• Spread pricing: Your plan pays exactly what the pharmacy receives on every claim.
• Rebate retention: We pass through 100% of rebates and build the formulary on clinical efficacy and value.
• Specialty drug mismanagement: Our licensed pharmacists guide members to lower-cost, clinically appropriate options.
• Vertical integration: We own 0% of the pharmacy supply chain, so we never steer members to our own pharmacies.

Employers see 15% pharmacy savings in the first year, and members give us a +70 Net Promoter Score. Our SureSpend guarantee refunds 100% of pharmacy spend overages.

Book a demo to see what your plan could save with Rightway.