For years, Pharmacy Benefit Managers (PBMs) have faced growing scrutiny over how they generate revenue. Much of that criticism has centered on two well-known practices: rebate retention and spread pricing.
Now, with federal regulators, state legislatures, and Congress actively targeting those revenue models, PBMs are adapting once again.
The industry’s next pivot is already underway — and employers, unions, and health plan sponsors should be paying close attention.
The new revenue engine? Fees.
The PBM Revenue Model Is Changing — Again
The three largest PBMs — Optum Rx (UnitedHealth Group), CVS Caremark (CVS Health), and Express Scripts (Cigna/Evernorth) — collectively control roughly 80% of the U.S. prescription drug market.
Their scale has allowed them to shape how pharmacy benefits operate for decades.
Historically, PBMs generated revenue through three primary channels:
-
Manufacturer rebates
-
Spread pricing between what PBMs charge plans vs. what pharmacies receive
-
Administrative and clinical fees
However, increased regulation is now constraining the first two.
Federal and state policymakers have intensified scrutiny of rebate arrangements and spread pricing practices. Multiple states have already enacted legislation restricting spread pricing in Medicaid, and similar transparency requirements are expanding into commercial markets.
As a result, PBMs are increasingly shifting toward fee-based compensation structures.
According to research from Nephron Research, PBMs generated $7.6 billion in fees in 2022, roughly double the amount earned four years earlier (Nephron Research, 2023).
The trend is accelerating.
The “Fee Shock” Many Employers May Not See Coming
Industry analysts are already predicting that 2027 contract renewals may bring a wave of new charges.
Independent benefits advisor Ann Lewandowski recently warned that employers could experience a “fee shock that is going to echo through the industry.” (Modern Healthcare, 2026).
Instead of traditional rebate structures, PBMs are increasingly charging:
• Clinical management fees
• Data reporting fees
• Specialty drug program fees
• Utilization management program fees
• Value-based contract administration fees
• Manufacturer access or formulary placement fees
Some PBMs also charge drug manufacturers for services such as data analytics, formulary positioning, and rebate aggregation.
In practice, many of these charges function similarly to rebates — but appear differently in contracts.
As healthcare consultant Chloe Bright explains, PBMs structure fees differently depending on the party paying them:
-
Employers and health plans typically pay for clinical management programs and specialty drug oversight.
-
Drug manufacturers often pay for formulary negotiations, reporting, and contract administration services.
While these services can provide real value, the complexity of PBM contracts means fees are often difficult for employers to identify or quantify.
Why Transparency Matters More Than Ever
Several legal challenges may emerge if fees appear excessive or disconnected from actual services.
Healthcare attorney William Sarraille of the University of Maryland notes that regulators and plan sponsors will increasingly question whether certain fees reflect legitimate services — or simply represent a new form of hidden revenue.
If services are unclear or inflated, legal and regulatory scrutiny could follow.
This matters because pharmacy spending remains one of the fastest-growing components of healthcare costs.
Specialty drugs now account for over 50% of pharmacy spend in many employer plans, despite serving a small percentage of patients (IQVIA Institute, 2024).
As PBMs adjust their business models, the burden of these costs often flows downstream to:
• Employers
• Union health plans
• Medicare Advantage plans
• Public sector health plans
What Plan Sponsors Should Be Doing Now
The shift toward fee-based PBM contracts makes independent oversight more important than ever.
Plan sponsors should be asking critical questions such as:
• What services are actually tied to each fee?
• Are those services already being performed else
where in the plan ecosystem?
• Are fees tied to measurable outcomes or savings guarantees?
• Are there conflicts between PBM revenue streams and plan cost containment goals?
Not all PBM models operate the same way. Some newer or independent PBMs are experimenting with transparent clinical fee models tied to performance guarantees, while others continue to rely on more traditional structures.
Understanding those differences is essential.
The Bottom Line
PBMs are not disappearing — nor are they standing still.
They are evolving their revenue models in response to regulation, market pressure, and scrutiny.
The question for employers and health plan sponsors is not whether fees will increase.
It is whether those fees deliver measurable value.
In the coming years, organizations that demand transparency, independent analysis, and clear performance metrics will be in the strongest position to manage pharmacy costs effectively.
Those that don’t may simply discover that the old rebate model has quietly been replaced by something else.
-
Modern Healthcare — Noah Tong (March 11, 2026)
PBMs reworking contracts as regulations reshape revenue models. -
Nephron Research (2023)
PBM fee revenue analysis showing $7.6B in fees in 2022. -
IQVIA Institute for Human Data Science (2024)
U.S. specialty drug spending trends. -
FTC Investigation into PBMs (2024–2025)
Federal Trade Commission inquiry into PBM business practices. -
Transparency-Rx Trade Group Statements (2025–2026)
Industry commentary on PBM transparency and fee structures.