Merck Lowered the Price of Januvia—Insurers Dropped It from Formularies and other notes from around the interweb:

• Merck Lowered the Price of Januvia—Insurers Dropped It from Formularies. In a move that should have been great news for patients, Merck significantly reduced the price of its blockbuster diabetes drug, Januvia (sitagliptin). However, instead of benefiting from the savings, many insured patients are discovering that their insurance plans no longer cover it. The culprit? Pharmacy Benefit Managers (PBMs)—powerful intermediaries that negotiate drug prices on behalf of insurance companies—have removed Januvia from their formularies. Those same powerful intermediaries are the latest in the hot seat for their predatory behavior in the United States health system. PBMs have been found to make coverage decisions based on their financial incentives rather than patient access to affordable medication.

• Walgreens Goes From $100 Billion Health Giant to Private-Equity Salvage Project. Customers bought more household items online at sites such as Amazon.com, instead of Walgreens’s more than 8,000 stores across the U.S. The pharmacy chain inked deals with other drug suppliers and doctors’ offices, but stood pat while rivals, including CVS and Express Scripts, merged with big health insurers, gaining control of the medical-reimbursement purse strings that were squeezing pharmacies. Walgreens cash flow sagged, its debt piled up and shares sank. And on Thursday, Walgreens was sold to private-equity firm Sycamore for $10 billion, down a staggering 91% from its $106 billion peak in 2015. The storied pharmacy chain—which became a ubiquitous seller of everything from diabetes injections to nail files as retailers consolidated across the U.S.—fell after it neglected to keep up with customer preference to buy online and failed to navigate the fierce competition and intense cost pressures of healthcare.

• The Endless Opportunities ChatGPT Creates for Pharmacists. With the recent rise of artificial intelligence (AI), not only in the pharmacy but across society, major players within the AI space have designed technology possible for any human being to adapt. One of the most notable examples is ChatGPT, an AI language model capable of answering straightforward questions with detailed answers. “ChatGPT is an AI language model capable of responding in straightforward language to medication-related questions,” wrote authors of a study published in the Journal of the American Pharmacists Association (JAPhA). “ChatGPT may assist clinicians in analyzing clinical cases and become a potential tool for supporting pharmacists in providing medication therapy management (MTM) and other health services.”

• PBM Reform: Tackling Transparency, Pricing, and Patient Access. Pharmacy benefit manager (PBM) reform has become a substantial topic of debate for the past decades as patients and health care providers advocate for improved transparency, fair pricing, and better access to critical therapies. PBMs occupy a central role in the drug price supply chain, acting as intermediaries between drug companies, insurers, and pharmacies to determine which drugs will be most available and what they will cost. The top 3 PBMs control 80% of the national market, giving them significant power to negotiate drug prices and rebates, create formularies, determine which pharmacies patients can use, process prescription drug claims, and set reimbursement rates for pharmacies. However, there is a significant lack of transparency around how these costs are negotiated between health plans and pharmaceutical manufacturers, leading to calls for policy reform.

Why TransparentRx Is Your Trusted Partner for Smarter Pharmacy Benefits

At TransparentRx, we specialize in delivering fiduciary pharmacy benefit management services that prioritize transparency, cost containment, and optimal patient outcomes. Our unique approach helps self-funded employers, benefits consultants, and health plan sponsors navigate the complexities of pharmacy benefits while reducing costs and enhancing care.

If you’re ready to take control of your pharmacy benefit strategy and eliminate hidden fees, contact TransparentRx today for a consultation. Let us help you achieve smarter, more effective benefits management.

Pharmacy benefit managers (PBMs) play a critical role in managing prescription drug costs for employers, yet many benefit decision-makers struggle with how to compare PBM proposals. The lack of clarity often results in higher costs, misaligned incentives, and poor contract terms. If you’re a PBM consultant, director of benefits, or benefit broker, understanding the differences between traditional, pass-through, transparent, and fiduciary PBMs is essential to making informed recommendations. Here’s how each model operates and why the distinctions matter.

Traditional PBMs: Profits Over Transparency

Traditional PBMs operate under a spread pricing model, where they charge plan sponsors more for drugs than they reimburse pharmacies. They also retain a portion of manufacturer rebates instead of passing the full amount back to the employer. While they claim to reduce pharmacy costs, the reality is that their financial incentives are misaligned with the employer’s goal of cost containment. The lack of visibility into contract terms allows traditional PBMs to generate excessive margins at the expense of plan sponsors.

Pass-Through PBMs: A Step Forward, But Not Enough

Pass-through PBMs promote transparency by committing to pass all rebates, discounts, and pharmacy reimbursements directly to the employer. However, this model does not necessarily eliminate hidden fees. Some pass-through PBMs still engage in practices such as administrative fees or spread pricing under different labels, making it crucial to scrutinize contract language carefully.

Transparent PBMs: More Clarity, But Still Not Fully Aligned

Transparent PBMs provide greater visibility into pricing and contractual terms, offering more straightforward fee structures. However, transparency alone does not guarantee fiduciary alignment. Some transparent PBMs still derive profits from administrative fees or other undisclosed revenue streams. While they disclose costs more openly than traditional or pass-through models, employers must still verify that the PBM’s financial incentives align with their best interests.

Fiduciary PBMs: The Gold Standard

A fiduciary PBM is contractually obligated to act in the best interests of the plan sponsor and its members. Unlike traditional, pass-through, or transparent PBMs, fiduciary PBMs fully disclose all revenue sources, eliminate spread pricing, and pass 100% of rebates back to the employer. They charge a flat administrative fee for their services, ensuring their profit does not depend on inflated drug costs or hidden fees. This model creates true alignment between the PBM and the employer, leading to lower overall costs and better outcomes.

Why Employers Struggle to Differentiate PBM Proposals

1. Misleading Terminology: PBMs often use terms like “pass-through” and “transparent” to appear cost-effective, but their contracts may still include hidden fees.
2. Complex Contracts: PBM agreements are notoriously difficult to decipher, filled with clauses that allow for profit retention through indirect means.
3. Focus on Rebates Instead of Net Costs: Many decision-makers fixate on rebate amounts rather than overall drug spending, failing to see how lower ingredient costs can save more money than high rebates.
4. Inconsistent Pricing Structures: Without standard pricing models, comparing PBM proposals side-by-side is challenging.

How to Cut Through the Confusion

• Demand a Fiduciary Standard: If a PBM refuses to sign a fiduciary contract, it’s a red flag.
• Focus on Net Cost, Not Rebates: A high rebate percentage or dollar amount does not mean lower drug costs.
• Request Full Revenue Disclosure: Ask the PBM to disclose all sources of income and ensure there are no hidden fees.
• Continuous Monitoring: Provides real-time oversight, allowing plan sponsors to detect and address pricing discrepancies, contract non-compliance, and waste before they escalate into major financial losses.

Final Thoughts

The contract is the foundation of any PBM relationship, dictating pricing, transparency, and accountability. Without a carefully negotiated agreement, employers may unknowingly agree to terms that allow hidden fees and misaligned incentives to persist. To achieve radical transparency and cost control, every PBM contract should be reviewed by an expert who understands the complexities of pricing structures, revenue streams, and contract loopholes. A thorough review ensures that the PBM is fully aligned with the employer’s best interests, eliminating hidden costs, and creating a pathway for sustainable savings. Investing in expert oversight of PBM contracts is not just a best practice—it’s a necessity for securing the financial health of your pharmacy benefits plan.

The Benefits and Challenges of Subcutaneous Infusion in Cancer Care and other notes from around the interweb:

• The Benefits and Challenges of Subcutaneous Infusion in Cancer Care. Subcutaneous (SC) injection in cancer treatment is an emerging administration method, carrying with it both benefits and challenges for patients and health care providers. The evolution of intravenous (IV) to subcutaneous (SC) chemotherapy has resulted in significant cost savings for patients and reduced administration times, easing hospital burden and helping improve resource allocation. Despite these benefits, regulatory and payer challenges remain. In a presentation at the ACCC 51st Annual Meeting & Cancer Center Business Summit in Washington, DC, Raghava Induru, MD, thoracic oncologist and director of operations at Atrium Health Advocate Aurora, Levine Cancer Institute, emphasized the need for better drug development, clinical trials, and payer acceptance, as well as a multi-faceted approach to optimize SC administration and improve patient experience.

• Walgreens Goes From $100 Billion Health Giant to Private-Equity Salvage Project. Customers bought more household items online at sites such as Amazon.com, instead of Walgreens’s more than 8,000 stores across the U.S. The pharmacy chain inked deals with other drug suppliers and doctors’ offices, but stood pat while rivals, including CVS and Express Scripts, merged with big health insurers, gaining control of the medical-reimbursement purse strings that were squeezing pharmacies. Walgreens cash flow sagged, its debt piled up and shares sank. And on Thursday, Walgreens was sold to private-equity firm Sycamore for $10 billion, down a staggering 91% from its $106 billion peak in 2015. The storied pharmacy chain—which became a ubiquitous seller of everything from diabetes injections to nail files as retailers consolidated across the U.S.—fell after it neglected to keep up with customer preference to buy online and failed to navigate the fierce competition and intense cost pressures of healthcare.

• The Endless Opportunities ChatGPT Creates for Pharmacists. With the recent rise of artificial intelligence (AI), not only in the pharmacy but across society, major players within the AI space have designed technology possible for any human being to adapt. One of the most notable examples is ChatGPT, an AI language model capable of answering straightforward questions with detailed answers. “ChatGPT is an AI language model capable of responding in straightforward language to medication-related questions,” wrote authors of a study published in the Journal of the American Pharmacists Association (JAPhA). “ChatGPT may assist clinicians in analyzing clinical cases and become a potential tool for supporting pharmacists in providing medication therapy management (MTM) and other health services.”

• PBM Reform: Tackling Transparency, Pricing, and Patient Access. Pharmacy benefit manager (PBM) reform has become a substantial topic of debate for the past decades as patients and health care providers advocate for improved transparency, fair pricing, and better access to critical therapies. PBMs occupy a central role in the drug price supply chain, acting as intermediaries between drug companies, insurers, and pharmacies to determine which drugs will be most available and what they will cost. The top 3 PBMs control 80% of the national market, giving them significant power to negotiate drug prices and rebates, create formularies, determine which pharmacies patients can use, process prescription drug claims, and set reimbursement rates for pharmacies. However, there is a significant lack of transparency around how these costs are negotiated between health plans and pharmaceutical manufacturers, leading to calls for policy reform.

Why TransparentRx Is Your Trusted Partner for Smarter Pharmacy Benefits

At TransparentRx, we specialize in delivering fiduciary pharmacy benefit management services that prioritize transparency, cost containment, and optimal patient outcomes. Our unique approach helps self-funded employers, benefits consultants, and health plan sponsors navigate the complexities of pharmacy benefits while reducing costs and enhancing care.

If you’re ready to take control of your pharmacy benefit strategy and eliminate hidden fees, contact TransparentRx today for a consultation. Let us help you achieve smarter, more effective benefits management.

Many directors of benefits review their PBM’s reports and assume the numbers tell the full story. But without understanding the fundamental calculations behind key performance metrics, it’s easy to miss hidden costs and misleading figures. PBMs often present data in ways that obscure true performance, making it difficult to assess whether you’re getting the best value. To take control of your pharmacy spend, you need to know not just what to measure, but how those numbers are calculated. Here are six PBM performance metrics every director of benefits must understand.

1. Specialty Dispensing Rate (SDR) is defined as the percentage of all dispensed prescriptions that are specialty drugs. Specialty drugs are high-cost medications used to treat complex, chronic conditions such as cancer, rheumatoid arthritis, and multiple sclerosis. These drugs often require special handling, administration, or monitoring. Figure 1 assumes an average cost of $8500 per 28-day supply for a specialty drug claim and $100 for a non-specialty prescription drug claim. Goal < 2.5%.
2. Generic Effective Rate (GER) is the average percent discount off the AWP for all generic drugs whether reimbursed at MAC, usual and customary pricing, or AWP discount. Because nine out of ten dispensed drugs are generic, the GDR performance metric is especially important. It can be difficult to catch where you are losing money until it is too late. You want to catch overpayments early enough to make the proper adjustment(s). Continuously monitor your GER so any overpayments to PBMs don’t pile up. Analyze performance by channel i.e. retail 30, retail 90 etc. If your pricing benchmark is NADAC, back in the ingredient cost + professional dispensing fee to calculate the NADAC effective rate (NER). Goal > 88%.
3. Generic Dispense Rate (GDR) or generic dispensing ratio is the number of generic fills divided by the total number of prescriptions. GDR is a standard performance metric on which our formulary manager is regularly evaluated. For every 1% increase in GDR a plan can expect to realize a 5% reduction in gross drug spend! Both GDR and GSR are indicators of how well clinical programs are performing. For example, loose utilization management will produce a poor (i.e. 84%) GDR. Goal > 90%.
4. Proportion Days Covered (PDC) is a commonly used metric in pharmacy benefits management to measure medication adherence. It represents the percentage of days within a specified period (usually 6 or 12 months) during which a patient has access to their prescribed medication. Unlike the Medication Possession Ratio (MPR), PDC accounts for overlapping prescriptions and is capped at 100%, making it a more reliable indicator of adherence. Goal > 80%.
5. Total Cost of Care (TCOC) in pharmacy benefits is the overall financial impact of prescription drug spending on a health plan, factoring in both direct and indirect costs. It goes beyond just drug prices and rebates to include medical cost offsets, patient adherence, PBM cost-shifting tactics, utilization management effectiveness, and member cost-sharing. A low pharmacy spend doesn’t always mean lower healthcare costs—if restrictive formularies or high patient out-of-pocket costs lead to increased hospitalizations or complications, the total cost of care rises. Evaluating pharmacy benefits through this lens ensures cost containment efforts don’t create bigger financial burdens elsewhere. Goal = $960 PMPY x number of members.
6. Per Member Per Month (PMPM) is the most fundamental cost indicator for financial benchmarking in pharmacy benefits. As such, every proposal should include a projected PMPM. Additionally, incumbent PBM cost performance should be measured by change in PMPM YOY for both whole dollars and percentage. It is calculated by dividing the total annual cost or revenue by the number of member months. Goal < $80 PMPM.

Every metric outlined above assumes clean claims—no reclassifications, exclusions, or manipulated data. When analyzing PBM performance, it’s critical to compare apples to apples, as PBMs are notorious for reclassifying drugs, reducing claim counts, and using other tactics to make their numbers look better than reality. If you don’t fully understand how these metrics are calculated, a non-fiduciary PBM will exploit your knowledge gap.

Conclusion – PBM performance metrics

Reviewing reports isn’t enough—you need to dig into the math behind the numbers to hold them accountable. A Playbook for Employers Addressing Pharmacy Benefit Management Misalignment could be your best resource for navigating these challenges, especially page seven. If you’re serious about cutting through the smoke and mirrors, let’s talk.

In every Certified Pharmacy Benefits Specialist (CPBS) course I teach, there’s one topic that never fails to ignite strong reactions from retail pharmacists: DAW (Dispense as Written) codes. When we get to DAW 9, emotions run high. Pharmacists often take the floor for 10 minutes, venting about how others manipulate this code—and they have every right to be frustrated.

DAW codes play a crucial role in billing claims correctly to a patient’s insurance plan. These codes help insurance companies and PBMs determine how much to reimburse a pharmacy and whether a medication qualifies for full or partial coverage. If the pharmacy doesn’t bill a claim correctly, patients may not receive the right drug at the right price. While DAW 0 serves as the default and DAW 1 appears rarely, PBMs commonly drive DAW 9.

For plan sponsors, brokers, and consultants, DAW 9 often flies under the radar, even though it directly increases costs and wasteful spending. Normally, when a prescriber allows substitution, the pharmacy dispenses the generic because it’s the lower-cost alternative. But when DAW 9 is applied, the pharmacist is forced to dispense the brand-name drug for it to be covered. This happens simply by switching the DAW code in the system from 0 to 9.

In a retail pharmacy, the pharmacy technician—not the pharmacist—often ensures the claim gets paid. When the system rejects a claim with DAW 0, the technician cycles through different DAW codes until the system accepts one. You might wonder, why would a PBM push this practice? One word: rebates.

If you’ve signed on with a non-fiduciary PBM that touts “$0 admin fees” on the pharmacy benefit or swaps rebates for medical benefit admin fee credits, how do you think they’re making money?

By keeping admin fees artificially low or diverting rebates, PBMs create hidden cash flow streams—DAW 9 being one of them. It allows them to increase their share of manufacturer revenue (rebates), directly inflating costs for plan sponsors and patients.

In 2025, working with a PBM that doesn’t provide radical transparency is fiscally reckless. Yet, most plan sponsors don’t even realize what’s happening. What they don’t know is costing them—big time.

Next Steps to Remedy DAW 9 Abuse:

1. Audit PBM Contracts: Ensure your PBM agreement explicitly prohibits the use of DAW 9 to manipulate rebates and increase brand drug utilization. Look for language that guarantees full transparency in formulary decision-making.
2. Demand Fiduciary Accountability: Work with a fiduciary PBM that is legally obligated to act in your best interest, ensuring cost-effective prescribing and rebate pass-through.
3. Monitor Prescription Claims Data: Analyze claim-level data to identify DAW 9 usage trends and flag unusual brand drug dispensing patterns. This will help pinpoint where excess costs are coming from.
4. Educate Pharmacy Teams and Providers: Ensure prescribers, pharmacists, and pharmacy technicians understand the financial impact of DAW 9 and encourage them to resist PBM-driven brand dispensing.
5. Implement Stronger Plan Controls: Work with your PBM to set up formulary and prior authorization rules that prevent unnecessary brand drug dispensing through DAW 9.

By taking these steps, plan sponsors can protect their pharmacy spend, ensure patients receive the most cost-effective medications, and shut down hidden PBM revenue schemes.

Elevate your expertise in pharmacy benefits management with the Certified Pharmacy Benefits Specialist® (CPBS) program, sponsored by the UNC-Chapel Hill Eshelman School of Pharmacy. Whether you’re an HR leader, finance executive, consultant, or pharmacist, this certification provides the in-depth knowledge and strategic insight needed to manage pharmacy benefits with confidence and cost efficiency. Gain up to twenty continuing education credits, enhance your career prospects, and help your organization take control of pharmacy spending. Register today to join a growing network of professionals shaping the future of pharmacy benefits management. Learn more at https://pharmacybenefitinstitute.com.

Fiduciary duty claims in prescription drug case dismissed and other notes from around the interweb:

• Fiduciary duty claims in prescription drug case dismissed. The U.S. District Court for the District of New Jersey recently dismissed two of three claims in a lawsuit against Johnson & Johnson (J&J) that alleged the company’s self-insured group health plan fiduciaries violated their duties under ERISA regarding the plan’s prescription drug benefit. The case, Lewandowski v. Johnson & Johnson, originally filed in early 2024, specifically claimed that J&J, as plan sponsor, breached its fiduciary duty of prudence under ERISA by failing to use good judgment when selecting a pharmacy benefit manager (PBM) and failing to negotiate better pricing terms for the plan and participants in its PBM services agreement. The lawsuit claimed these failures resulted in increased costs (e.g., higher plan premiums, deductibles, copayments, and cost sharing), lower wages and limited wage growth, thus harming participants and beneficiaries.

• Aetna sues drugmakers for widespread price-fixing and collusion. Aetna is taking legal action against Pfizer, Novartis, Teva Pharmaceuticals, and others, saying the list of drugmakers conspired to overcharge the insurer, consumers, and the federal government for generic drugs. The complaint (PDF), filed Dec. 31, claims the drugmakers communicated secretly at trade conferences or through phone calls, beginning in 2012, to determine the market share, prices, and bids of certain drugs. If communication was in writing, they destroyed the evidence, Aetna claimed. “They effectuated their market allocation by either refusing to bid for particular customers or providing outrageously high cover bids,” the complaint said. “This created an artificial equilibrium that enabled the conspirators to then collectively raise and/or maintain prices for a particular generic drug.”

• Pharmacy benefit managers raised prices by over 1,000% on specialty drugs. In the latest report, Specialty Generic Drugs: A Growing Profit Center for Vertically Integrated Pharmacy Benefit Managers, the FTC staff reported that the three largest PBMs drove up the price of specialty generic drugs for patients with cancer, multiple sclerosis, HIV, and pulmonary hypertension by more than 1,000% in some cases and by hundreds of percent in other cases. Together, the nation’s three largest PBMs manage 79% of all prescription drug claims for some 270 million Americans, the FTC staff noted in the July report, Pharmacy Benefit Managers: The Powerful Middlemen Inflating Drug Costs and Squeezing Main Street Pharmacies.

• How a Duty To Spend Wisely on Worker Benefits Could Loosen PBMs’ Grip on Drug Prices. Ann Lewandowski knows all about pharmacy benefit managers, or PBMs, the companies that shape the U.S. drug market. Her job, as a policy advocate at drugmaker Johnson & Johnson, was to tell patient and physician groups about the PBMs’ role in high drug prices. Armed with that knowledge, Lewandowski filed a potentially groundbreaking lawsuit in February. Rather than targeting the PBMs, however, she went after a big company that uses one — her own employer, Johnson & Johnson. Lewandowski charges in her lawsuit that by contracting with the PBM Express Scripts, which is part of the insurance giant Cigna, Johnson & Johnson — which fired her in April — failed in its duty to ensure reasonable drug prices for its more than 50,000 U.S. employees.

Why TransparentRx Is Your Trusted Partner for Smarter Pharmacy Benefits

At TransparentRx, we specialize in delivering fiduciary pharmacy benefit management services that prioritize transparency, cost containment, and optimal patient outcomes. Our unique approach helps self-funded employers, benefits consultants, and health plan sponsors navigate the complexities of pharmacy benefits while reducing costs and enhancing care.

If you’re ready to take control of your pharmacy benefit strategy and eliminate hidden fees, contact TransparentRx today for a consultation. Let us help you achieve smarter, more effective benefits management.

PBM hit with $10 million verdict in in price-fixing arbitration and other notes from around the interweb:

• PBM hit with $10 million verdict in in price-fixing arbitration. The AIDS Healthcare Foundation won a legal battle against pharmacy benefit manager Prime Therapeutics LLC in an arbitration ruling on Jan. 17. Arbitrator Stuart Widman found that Prime violated federal and state antitrust laws by engaging in price-fixing agreements with Express Scripts, another major PBM, according to a Jan. 23 news release from the foundation. The ruling awarded AHF $10,309,707 in treble damages and granted injunctive relief, permanently blocking Prime from continuing the price-fixing collaboration with Express Scripts regarding reimbursements for drugs and services provided by AHF. Prime, which administers pharmacy benefits for around 38 million people, in April 2020 was found to have aligned its reimbursement rates with Express Scripts, the release said.

• FTC Second Interim Staff Report Finds PBMs Charge Significant Markups. The Federal Trade Commission today published a second interim staff report on the prescription drug middleman industry, which focuses on pharmacy benefit managers’ (PBMs) influence over specialty generic drugs, including significant price markups by PBMs for cancer, HIV, and a variety of other critical drugs. Staff’s latest report found that the ‘Big 3 PBMs’—Caremark Rx, LLC (CVS), Express Scripts, Inc. (ESI), and OptumRx, Inc. (OptumRx)—marked up numerous specialty generic drugs dispensed at their affiliated pharmacies by thousands of percent, and many others by hundreds of percent. Such significant markups allowed the Big 3 PBMs and their affiliated specialty pharmacies to generate more than $7.3 billion in revenue from dispensing drugs in excess of the drugs’ estimated acquisition costs from 2017-2022.

• DOJ hits Walgreens with lawsuit for filling ‘unlawful’ opioid prescriptions. The Department of Justice (DOJ) hit drugstore chain Walgreens with a lawsuit this week for filling “unlawful” opioid prescriptions that had no “legitimate” medical purpose for over a decade. The lawsuit, which was filed in U.S. District Court for the Northern District of Illinois, alleges that Walgreens’ pharmacists filled millions of prescriptions despite “red flags” indicating that they were likely to be unlawful and that it pressured its pharmacists to fill prescriptions while not taking the necessary time to “confirm their validity.” Walgreens allegedly ignored substantial evidence from multiple sources that its stores were dispensing unlawful prescriptions, including from its own pharmacists and internal data,” the DOJ said in a press release.”

• How a Duty To Spend Wisely on Worker Benefits Could Loosen PBMs’ Grip on Drug Prices. Ann Lewandowski knows all about pharmacy benefit managers, or PBMs, the companies that shape the U.S. drug market. Her job, as a policy advocate at drugmaker Johnson & Johnson, was to tell patient and physician groups about the PBMs’ role in high drug prices. Armed with that knowledge, Lewandowski filed a potentially groundbreaking lawsuit in February. Rather than targeting the PBMs, however, she went after a big company that uses one — her own employer, Johnson & Johnson. Lewandowski charges in her lawsuit that by contracting with the PBM Express Scripts, which is part of the insurance giant Cigna, Johnson & Johnson — which fired her in April — failed in its duty to ensure reasonable drug prices for its more than 50,000 U.S. employees.

Why TransparentRx Is Your Trusted Partner for Smarter Pharmacy Benefits

At TransparentRx, we specialize in delivering fiduciary pharmacy benefit management services that prioritize transparency, cost containment, and optimal patient outcomes. Our unique approach helps self-funded employers, benefits consultants, and health plan sponsors navigate the complexities of pharmacy benefits while reducing costs and enhancing care.

If you’re ready to take control of your pharmacy benefit strategy and eliminate hidden fees, contact TransparentRx today for a consultation. Let us help you achieve smarter, more effective benefits management.

Artificial intelligence (AI) is revolutionizing healthcare, and pharmacy benefits management (PBM) is no exception. Employers are increasingly leveraging AI-driven solutions to enhance cost control, improve medication adherence, and optimize plan design. However, with innovation comes responsibility. Employers must navigate AI’s potential while ensuring transparency, accountability, and ethical decision-making in pharmacy benefits management.

The Role of AI in Pharmacy Benefits Management

AI has introduced a range of advancements in PBM, from predictive analytics that forecast high-risk patients to automated prior authorizations that streamline approvals. Predictive analytics help identify patterns in claims data to anticipate high-cost drug utilization and recommend proactive interventions. Automated prior authorizations expedite approvals by analyzing clinical guidelines and patient history, reducing delays and administrative burdens.

AI also plays a critical role in fraud detection, flagging unusual prescribing or billing patterns to combat waste and ensure cost-effective care. Additionally, AI-driven adherence tools send reminders and provide personalized insights, leading to better health outcomes and reduced hospitalizations. Finally, dynamic formulary management continuously assesses drug effectiveness and costs, enabling real-time adjustments to optimize affordability and quality.

Balancing Innovation with Employer Accountability

While AI presents numerous opportunities, employers must exercise due diligence to ensure ethical implementation. Transparency is key—employers should demand visibility into how AI models determine drug coverage, formulary recommendations, and prior authorization approvals. Understanding these algorithms helps prevent biased or cost-driven decisions that may negatively impact employees.

Data privacy and security are paramount. Since AI relies on vast amounts of sensitive health data, employers must ensure their PBM partners comply with HIPAA and other privacy regulations to protect employee information from breaches and misuse. Additionally, while AI can drive cost reductions, employers must ensure savings are not achieved at the expense of patient outcomes. Regular audits and independent reviews of AI-generated decisions can prevent unethical cost-cutting measures that deny employees access to necessary medications.

Employers should also maintain human oversight in AI-driven decision-making. AI should augment—not replace—human expertise. Working with PBMs that integrate AI insights with clinical pharmacist reviews ensures nuanced decision-making that accounts for individual patient needs. Furthermore, AI should align with fiduciary responsibilities, ensuring decisions prioritize patient health, cost-effectiveness, and long-term value rather than short-term financial gains.

Questions Employers Should Ask Their PBM About AI

To ensure AI is used responsibly, employers should ask:

• How does AI influence formulary and coverage decisions?
• What safeguards are in place to prevent bias in AI-driven benefit determinations?
• How does AI-driven cost-saving align with clinical best practices?
• What level of human oversight is included in AI decision-making?
• How is employee data protected within AI-driven PBM systems?

Conclusion: The Future of AI in Pharmacy Benefits

AI is set to play an increasingly vital role in pharmacy benefits management, offering efficiency, cost savings, and improved patient care. However, employers must remain vigilant, ensuring AI-driven decisions align with ethical, transparent, and employee-centric strategies. By demanding accountability from PBMs and maintaining oversight, employers can harness AI’s potential while safeguarding their workforce’s health and financial well-being.

As AI continues to evolve, employers must stay informed, engaged, and proactive in their approach to pharmacy benefits. The key to success lies in balancing technological innovation with the fiduciary responsibility to provide fair, transparent, and effective healthcare benefits for employees.

FTC second interim staff report finds PBMs charge significant markups and other notes from around the interweb:

• FTC Second Interim Staff Report Finds PBMs Charge Significant Markups. The Federal Trade Commission today published a second interim staff report on the prescription drug middleman industry, which focuses on pharmacy benefit managers’ (PBMs) influence over specialty generic drugs, including significant price markups by PBMs for cancer, HIV, and a variety of other critical drugs. Staff’s latest report found that the ‘Big 3 PBMs’—Caremark Rx, LLC (CVS), Express Scripts, Inc. (ESI), and OptumRx, Inc. (OptumRx)—marked up numerous specialty generic drugs dispensed at their affiliated pharmacies by thousands of percent, and many others by hundreds of percent. Such significant markups allowed the Big 3 PBMs and their affiliated specialty pharmacies to generate more than $7.3 billion in revenue from dispensing drugs in excess of the drugs’ estimated acquisition costs from 2017-2022.

• Medicare Coverage of Anti-Obesity Medications? The proposed reinterpretation of Medicare Part D coverage of anti-obesity medications may provide approximately 3.4 million Medicare beneficiaries who have obesity with access to these innovative therapies. Medicare coverage would reduce out-of-pocket costs for these prescription drugs by as much as 95 percent for some enrollees. Approximately four million adult Medicaid enrollees may also gain new access to these medications.

• Pharmacy Benefit Manager uses unallowable pricing model. Spread pricing occurs when a managed care organization (MCO) reimburses its pharmacy benefit manager (PBM) for a prescription at a higher rate than what the PBM pays the pharmacy. This discrepancy, representing the prescription cost, is prohibited under Medicaid rules. Medicaid mandates that MCOs reimburse PBMs only for the actual prescription cost while also paying a separate administrative fee to the PBM for managing the program.

• How a Duty To Spend Wisely on Worker Benefits Could Loosen PBMs’ Grip on Drug Prices. Ann Lewandowski knows all about pharmacy benefit managers, or PBMs, the companies that shape the U.S. drug market. Her job, as a policy advocate at drugmaker Johnson & Johnson, was to tell patient and physician groups about the PBMs’ role in high drug prices. Armed with that knowledge, Lewandowski filed a potentially groundbreaking lawsuit in February. Rather than targeting the PBMs, however, she went after a big company that uses one — her own employer, Johnson & Johnson. Lewandowski charges in her lawsuit that by contracting with the PBM Express Scripts, which is part of the insurance giant Cigna, Johnson & Johnson — which fired her in April — failed in its duty to ensure reasonable drug prices for its more than 50,000 U.S. employees.

Why TransparentRx Is Your Trusted Partner for Smarter Pharmacy Benefits

At TransparentRx, we specialize in delivering fiduciary pharmacy benefit management services that prioritize transparency, cost containment, and optimal patient outcomes. Our unique approach helps self-funded employers, benefits consultants, and health plan sponsors navigate the complexities of pharmacy benefits while reducing costs and enhancing care.

If you’re ready to take control of your pharmacy benefit strategy and eliminate hidden fees, contact TransparentRx today for a consultation. Let us help you achieve smarter, more effective benefits management.