A broker's guide to breaking the rebate cycle

Prescription drug costs remain one of the most pressing challenges in American healthcare. Even with insurance, many healthcare consumers struggle: 29% of adults report not taking their medications as prescribed due to cost. High deductibles, opaque pricing and complex formularies reliant on rebates often mean coverage doesn't equal affordability. Employers feel this pain, too, with pharmacy spending now among the fastest-growing and least predictable healthcare costs. 

Brokers and advisers, of course, play a critical role in helping employers design pharmacy benefits that balance affordability with access to life-changing medications. Too often, rebate-driven formularies mask the true cost of drugs and push plans toward high-priced therapies that may not deliver better outcomes. 

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But employers deserve a clearer picture, which brokers and advisers can provide through purposeful benefits management strategies seeded outside the status quo. Here are four top-of-mind consideration: 

1. Every dollar in a pharmacy benefit should be tied to value – not to rebates.
Savvy brokers and advisers should advocate for a drug-list approach or value-based formulary. Unlike traditional formularies in a rebate-focused approach, drug lists are dynamic, customizable and based on real-time data. Drug-list management tailors coverage to the medications employees actually use, helping employers avoid wasting money on high-cost, low-utilization drugs and instead secure the lowest net cost for both the plan and its members. 
This model allows for adjustments, including reprioritizing or discouraging expensive drugs in favor of cost-effective alternatives and even introducing cash pricing visibility that expands member choice and savings. 

Most importantly, the approach helps improve clinical outcomes by aligning coverage with therapies that are more appropriate for each population, ensuring employees get the right medications without unnecessary hurdles or delays.

Rebates are perhaps the most well-known tactic used by traditional pharmacy benefit managers (PBMs) to keep more profits for themselves, but there are others, including alternate funding and international sourcing. Brokers and consultants need to be up to speed about how these approaches will impact employer and member value — and how to spot if there's a game going on behind the scenes.

Paired with transparent, pass-through PBM models that return savings directly to employers and patients, brokers can ensure every dollar spent is tied to real value by avoiding rebate-focused strategies and other games. 

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2. Transparency isn't a nice-to-have. It's the foundation of affordability.
Brokers should push clients to demand full disclosure from PBMs, including rebate revenues retained, administrative fees, spread pricing and any subcontracted markups. Employers also should look for partners that pass along network pharmacy rates at true cost without markup and that operate as non-owned entities, free of the misaligned incentives that come from the high profitability of traditional PBMs.

3. Prescription as the point of empowerment.
Transparency doesn't stop at the plan design level — it must extend to every prescription decision. Yet most consumers today face a fragmented and opaque prescription process shaped by traditional PBM models that often obscure prices and restrict choice. Rather than fear and confusion, the moment a prescription is written should be a point of empowerment — a chance to align cost with value. That's where modern member tools make a difference.

All-in-one digital experiences now give members real-time visibility into drug prices (cash or with insurance), pharmacy options and clinically appropriate alternatives — all at the point of care. This transparency empowers smarter choices, helping improve adherence and reducing total drug spend for both the individual and the plan.

This isn't theoretical: In our experience, when members know that a lower-cost, equally effective drug is available, more than half will ask their prescriber for it. By understanding their options up front, they can avoid costly surprises at the pharmacy counter and contribute to a more sustainable benefit design overall.

For brokers and advisers, these tools represent an actionable way to help employer clients put transparency into practice. By recommending solutions that deliver cost and choice data directly to members, they can drive affordability when it can make the most impact: when the prescription is written.

4. Clinical review matters.
Unbiased prior authorization supported by independent experts — and, in rare cases, guidance from key opinion leaders — can help ensure patients get the right therapy without unnecessary barriers or wasteful spending. 

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Let's use as an example GLP-1s, one of the most significant shifts in pharmacy spend. Prescription uptake has soared: GLP-1s accounted for one-third of the top 10 drugs in terms of spending in 2024, helping drive a 10.2% increase in U.S. prescription drug spending overall.

This is where rigorous, unbiased prior authorization protocols play a critical role. They ensure that patients who truly need these medications can access them, while reducing wasteful or off-label use that drives costs without improving outcomes. We've seen this approach deliver measurable results, helping one employer reduce GLP-1 claims and utilizers by nearly 30% through clinically appropriate utilization management and label-based prescribing.

Brokers and advisers can challenge the status quo. The goal is simple: Deliver affordable access to life-changing medications while protecting employers from hidden costs. Those who are ready to challenge assumptions about pharmacy benefits on behalf of their employer clients have the tools now to do just that.