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.

Negotiating a pharmacy benefit manager (PBM) contract is a pivotal step for self-insured employers looking to reduce costs, improve transparency, and deliver better outcomes for their employees. However, success in these negotiations requires strategy, preparation, and collaboration across the organization. Below are six key steps on how self-insured employers can optimize PBM contract negotiations to ensure optimal results.

1. Start Negotiating One Year in Advance

Effective PBM contract negotiations require ample time for due diligence, analysis, and back-and-forth discussions. Initiating negotiations at least a year before your existing contract’s renewal allows room to:

• Review and assess the current PBM’s performance.
• Compare options with other providers.
• Address potential roadblocks without the pressure of looming deadlines.

Starting early also signals to PBMs that you are serious about understanding and refining your pharmacy benefit offerings. It shifts the balance of power by giving you time to walk away if terms don’t align with your goals.

2. Support Contract Proposals and Requests with Data

PBMs thrive on complexity, and data can be your most powerful tool to level the playing field. Leverage claims data, cost trend analyses, and utilization reports to justify your requests during negotiations. For example:

• Use data to highlight inefficiencies or hidden fees in your current arrangement.
• Model the financial impact of potential contract changes.
• Benchmark performance metrics against industry standards.

Solid data transforms your arguments from subjective preferences into objective requirements, increasing the likelihood of favorable terms.

3. Make It About More Than Just Price

Focusing too much on price (i.e., discounts, rebates, NADAC etc.) leaves value on the table. Instead, negotiate for terms that provide holistic cost management and improve employee outcomes. Consider provisions such as:

• Radically transparent pricing models that eliminate spread pricing or rebate gaming.
• Clinical programs that promote adherence, optimize therapy, and reduce waste.
• Non-exclusivity rights, such as specialty or mail pharmacy, to ensure control and flexibility.

A price-centric approach might save money in the short term but fail to address long-term value or alignment with your goals as a self-insured employer.

4. Partner with Experts

PBM negotiations are highly technical, and partnering with certified experts can give you an edge. Certified Pharmacy Benefits Specialists (CPBS) bring a deep understanding of the PBM industry’s profit models, contract structures, and cost-containment opportunities. Their expertise ensures you avoid pitfalls like hidden fees, misaligned incentives, and vague terms.

Benefits of working with CPBS professionals include:

• Enhanced Negotiation Strategies: CPBS-certified consultants identify and prioritize areas where you can achieve significant cost savings without sacrificing patient outcomes.
• Comprehensive Market Insights: They bring a detailed understanding of industry benchmarks and emerging trends, ensuring you’re equipped with the most up-to-date strategies.
• Comprehensive Audit Support: Experts ensure your PBM adheres to the agreed-upon contract terms, reducing waste and uncovering potential savings.

There is often a disconnect between what self-insured employers assume their consultants understand about pharmacy benefits and the consultants’ actual level of expertise. A CPBS-certified consultant closes the gap by acting as your advocate, providing the knowledge and confidence to negotiate contracts that truly align with your goals.

5. Understand Your Leverage

Your ability to secure favorable terms depends on understanding your leverage. Factors such as employee population size, claims volume, and the competitiveness of your local PBM market play a significant role. Key ways to enhance leverage include:

• Highlighting your readiness to switch to a more favorable PBM.
• Demonstrating your knowledge of the PBM’s cost drivers and profit models.
• Partnering with a fiduciary-model PBM that prioritizes your interests.

When you understand where you hold power, you can negotiate from a position of strength rather than dependency.

6. Ensure Strategic Alignment Among Executive Leaders

PBM negotiations shouldn’t be conducted in silos. Cross-functional alignment among finance, HR, and executive leadership ensures consistency in goals and priorities. Develop a unified strategy that clearly outlines:

• The organization’s priorities (e.g., cost savings, improved outcomes, or transparency).
• Non-negotiable contract terms.
• How pharmacy benefit changes align with broader benefits strategies.

When leadership is aligned, negotiations are more focused and decisive, reducing the likelihood of costly delays or internal disagreements.

Final Thoughts

Optimizing PBM contract negotiations is about more than securing the lowest price; it’s about creating a partnership that drives better outcomes for both your organization and its employees. By starting early, leveraging data, focusing on long-term value, and ensuring alignment across stakeholders, self-insured employers can significantly improve their position and secure terms that align with their objectives.

To learn more about how to approach PBM contract negotiations with a fiduciary mindset, visit TransparentRx.

Medicare Coverage of Anti-Obesity Medications and other notes from around the interweb:

• 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.

• Ex-McKinsey partner pleads guilty to destroying records about work promoting opioids. The case followed years of investigations and litigation concerning the extent to which Purdue and other drugmakers contributed to a deadly opioid addiction epidemic in the U.S. The U.S. Centers for Disease Control and Prevention says nearly 727,000 opioid overdose deaths occurred from 1999 to 2022. Purdue is currently involved in court-ordered mediation to rework a multibillion-dollar civil settlement with states, local governments and others in bankruptcy proceedings after the U.S. Supreme Court “turned aside” its initial deal.

• 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.

Fiduciary duty ensures trust and accountability between PBMs and clients in the complex world of pharmacy benefit management. Understanding PBM fiduciary duty helps benefits directors, brokers, and CFOs align PBM agreements with organizational goals while protecting plan members’ interests.

What Is Fiduciary Duty?

Fiduciary duty requires a PBM to act in the best interests of its clients—self-insured employers, health plans, or unions. This duty extends beyond standard business obligations, encompassing care, skill, prudence, and diligence comparable to a similar enterprise with aligned objectives. Fiduciary responsibility ensures transparency and mitigates conflicts of interest that could compromise the client’s financial or operational integrity.

Core Components of PBM Fiduciary Duty

• Standard of Care PBMs like TransparentRx agree to operate with a high standard of care, skill, and prudence. This means managing the pharmacy benefit program with the same diligence as a fiduciary in a comparable role, safeguarding the client’s and covered individuals’ interests.
• Conflict of Interest Disclosure Fiduciary PBMs must notify clients of any activity or policy that creates a direct or indirect conflict of interest. For instance, if a PBM profits from recommending a higher-cost drug instead of a lower-cost alternative, it must disclose such arrangements.
• Transparent Financial Reporting PBMs must provide clients with detailed financial and utilization data. This includes information on drug costs, rebates, and any payments received from pharmaceutical manufacturers. Transparency empowers clients to verify that plan dollars are being utilized effectively and ethically.
• Drug Substitution Transparency PBMs must disclose cost details and benefits gained from substituting one prescription drug for another. If a substitution increases costs or generates a financial benefit for the PBM, they must pass those benefits entirely to the client.
• Pass-Through Rebates and Payments Fiduciary PBMs ensure that any payments or benefits received from drug manufacturers, based on sales volume or other incentives, are transferred directly to the client. This practice prevents misaligned incentives that could otherwise drive up plan costs.
• Disclosure of Financial Arrangements PBMs must disclose financial arrangements with pharmaceutical manufacturers or other stakeholders, such as formulary management fees, educational support, or data sales fees, to the client. To ensure full transparency while protecting proprietary information, clients may need to sign confidentiality agreements.

Legal Recourse for Breaches of Fiduciary Duty

Clients can seek legal remedies, like injunctive relief or damages, if a PBM violates its fiduciary duty. Courts may award attorney’s fees and costs to prevailing clients, helping organizations hold PBMs accountable without excessive financial strain.

Why Fiduciary PBMs Are the Future

Fiduciary PBMs like TransparentRx are reshaping the pharmacy benefits landscape by prioritizing transparency, accountability, and client outcomes. For employers and plan sponsors, partnering with a fiduciary PBM translates into measurable cost savings, ethical practices, and improved plan member satisfaction. Fiduciary duty is not just a legal term—it’s a commitment to doing what’s right.

Conclusion

Understanding PBM fiduciary duty equips benefits professionals and organizational leaders with the knowledge to demand transparency and accountability. By aligning with fiduciary PBMs, organizations can ensure that every dollar spent on pharmacy benefits works toward the health and well-being of their covered individuals, rather than fueling unnecessary profit margins.

Choosing a fiduciary PBM isn’t just a strategic decision—it’s a responsibility to your organization and its members.

Drugmakers to hike US prices of over 250 branded medications and other notes from around the interweb:

• Drugmakers to hike US prices of over 250 branded medications. Drugmakers plan to raise the prices of at least 250 branded medications in the US at the start of 2025, per data analyzed by 3 Axis Advisors and reported on by Reuters. The increases are to list prices and do not include discounts or rebates to pharmacy benefit managers (PBMs). The median price increase of the drugs is 4.5%, which is consistent with the median for all drug price increases in 2024. Just a decade ago, the median price increase for branded drugs was 9%. What’s driving this decision? While smaller than they used to be, the price hikes are an avenue for drugmakers to bolster their bottom lines.

• Utah sues pharmacy benefit managers, arguing they flooded the state with opioids. In a statement issued earlier this week, Executive Director of the Utah Department of Commerce Margaret Busse said pharmacy benefit managers played a “covert role” in the opioid crisis, which for several years has killed more than 100,000 Americans annually. Although rates appear to be in decline after hitting an unprecedented high of approximately 111,000 deaths in 2022, data suggests more than one hundred Americans still die each day from some kind of opioid. The complaint accuses the companies of colluding with manufacturers to give opioids “preferred status” as a prescription drug, while failing to use “the wealth of data” available that showed the dangers of overprescribing opioids. The state also alleges companies failed to comply with state and federal laws by “dispensing opioids through their mail order 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.

• PBMs facing increasing pressure: 4 things to know? Tucked into the bipartisan budget deal that President-elect Donald Trump’s allies torpedoed earlier this month was a rare and significant attempt to reform the mechanics of America’s drug-pricing system. While the PBM provisions in the 1,547-page stopgap bill are now dead, they are far from buried. The bipartisan agreement highlighted a growing consensus that PBM business models are flawed, with both Republicans and Democrats—and even Trump himself—signaling intent to take action. In recent weeks, Trump has twice criticized PBMs, declaring in a press conference his intention to “knock out the middleman.” At the core of the failed reform effort was a push for greater transparency and alignment in PBM operations. Among the proposed measures were requirements that PBMs disclose more data.

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.