Pharmacy benefits are a material and rapidly growing component of self-funded employer healthcare cost — and one of the least transparent. Before renewal, the most valuable work a CFO can do is not negotiating the headline rate but understanding how the PBM is compensated and what the contract lets you verify. Without that, discounts can be real in the contract and invisible in the economics.
Regulatory Status Callout
The January 2026 Department of Labor PBM fee disclosure rule referenced in our research is a PROPOSED RULE. It is not final, not effective, and not currently a mandatory disclosure requirement. It should be understood as a proposed direction of travel, not an enacted obligation. Confirm current status with benefits counsel before relying on it.
Answer-First Summary
PBM transparency is a contract and data question before it is a negotiation question. If you cannot state your PBM's total compensation, the difference between spread and pass-through pricing, and your rights to the underlying claims data, then you do not yet have the information needed to evaluate a renewal — regardless of the discount you are shown.
Spread vs. Pass-Through Pricing
| Model | How it works | Why transparency matters |
|---|---|---|
| Spread pricing | The PBM retains the difference between what the plan pays and what the pharmacy is reimbursed. | The spread may be invisible in the reported cost, so plan savings can be overstated. |
| Pass-through pricing | The plan pays the PBM a defined dispensing fee plus an agreed price, with the pharmacy reimbursement passed through. | Makes the plan's cost more visible and the PBM's compensation more identifiable. |
Ten Questions to Ask Before PBM Renewal
| # | Question | Why it matters |
|---|---|---|
| 1 | What is the PBM's total direct compensation, and how is it disclosed? | Establishes the baseline for evaluating true plan cost. |
| 2 | Is pricing based on spread or pass-through? | Determines whether savings claims are visible or embedded. |
| 3 | How are rebates defined, and how much is passed through? | Rebate definitions vary and can materially change net cost. |
| 4 | What manufacturer or affiliate compensation does the PBM receive? | Reveals compensation beyond the administrative fee. |
| 5 | Does the PBM steer volume to affiliated specialty or mail-order pharmacies? | Affiliation can influence effective cost and choice. |
| 6 | How does formulary design create or remove incentives? | Formulary placement affects utilization and net spend. |
| 7 | What claims data will the plan receive, and in what format? | Data access is the foundation for any real cost review. |
| 8 | What audit rights does the contract grant the plan? | Without audit rights, transparency commitments are hard to verify. |
| 9 | What performance guarantees exist, and what happens if they are missed? | Guarantees without remedies are marketing, not protection. |
| 10 | What are termination terms and data portability rights? | Exit terms determine whether the plan can actually change PBMs. |
A related question — RxDC responsibility — should be settled explicitly. The plan remains responsible for prescription drug data collection and reporting to the extent required; the PBM can support it, but responsibility should be documented in the contract rather than assumed.
RxDC: Who Owns It?
RxDC reporting obligations sit with the plan. In practice, PBMs and carriers frequently supply the underlying data. The risk is the gap: if neither party has clearly accepted responsibility, submissions can be late, incomplete, or inconsistent. Before renewal, confirm in writing who supplies which data, in what file format, and by when.
Renewal-Document Checklist
- Current PBM contract and all amendments
- Fee schedules and administrative fee disclosures
- Rebate methodology and pass-through terms
- Formulary documents and any utilization management criteria
- Claims data files and reporting specifications
- Audit provisions and any recent audit findings
- Performance guarantees and remedies
- RxDC data responsibilities and file specifications
- Termination, transition, and data portability terms
- Two to three years of pharmacy trend and utilization data
Metrics CFOs Should Track
- Total pharmacy spend per member, trended year over year
- PMPM pharmacy cost, split by brand, generic, and specialty
- Generic dispensing rate and specialty spend as a share of total
- Actual rebate dollars received versus projected
- Administrative and dispensing fees as a percentage of spend
- Specialty and mail-order volumes routed to affiliated pharmacies
Leadership Questions
- Can we state our PBM's total compensation without estimating?
- Do we know whether our pricing is spread or pass-through?
- What was projected versus actual rebate revenue last year?
- Do we have contractual rights to the claims data we would need to verify savings?
- Does the contract give us meaningful audit rights?
- Who is accountable for RxDC data, and is it documented?
- If we wanted to change PBMs, could we actually move our data and members?
Frequently Asked Questions
Review Your PBM Contract Before Renewal
Blackspire can help self-funded employers organize PBM compensation, pricing structure, data rights, and renewal decisions. Confidential and without obligation.
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Sources & Methodology
- U.S. Department of Labor — Employee Benefits Security Administration (EBSA) guidance and proposed rules on pharmacy benefit manager fee disclosure (referenced as a proposed rule)
- Centers for Medicare & Medicaid Services — Prescription Drug Data Collection (RxDC) reporting guidance
- ERISA plan fiduciary framework and employer benefits disclosure considerations
Disclaimer: This article is general executive education and is not ERISA, legal, tax, or benefits advice. Regulatory references — including the January 2026 Department of Labor PBM fee disclosure rule — describe a proposed rule and not a final, effective, or mandatory requirement. Employer obligations are fact-specific. Consult qualified benefits counsel and advisors before acting.
Published: September 12, 2026 · Last Modified: September 12, 2026 · Publisher: Blackspire Advisors · Category: Employer Healthcare