Pharmacy benefit managers (PBMs) have mastered the art of hiding profits. One of the least discussed ways is PBMs are quietly funding your consultant. On the surface, it looks like a harmless relationship. In reality, it creates a dangerous conflict of interest where employers end up paying for both the subsidy and the inflated costs it produces.
Conflicted Advice
When consultants accept compensation from PBMs, whether it is direct payments, bonus programs, or referral incentives, they lose their independence. Instead of guiding employers toward the PBM that best serves the plan and its members, they are nudged toward the one that pays them the most.
This turns advice into a sales channel. Employers believe they are hiring a trusted advisor, but in many cases, the consultant is simply steering business to the PBM that keeps their personal revenue stream intact. The result: distorted decision-making that benefits the PBM and consultant, not the client.
Hidden Costs
PBMs do not hand out subsidies for free. Whatever they pay consultants is clawed back through higher drug costs, opaque contract terms, or inflated administrative fees. That means the “free” support from a consultant accepting PBM money is anything but free.
The amounts involved are significant. These PBM-to-consultant payments often range from $3 per member per month to $5 per member per month. On a 5,000-life group, that is $180,000 to $300,000 a year flowing directly to the consultant. To make matters worse, consultants frequently specify in agreements that these fees are not to be charged to the employer, but instead paid separately by the PBM. While that sounds protective, the employer still ends up funding the arrangement because the PBM builds those costs back into higher drug prices.
Employers unknowingly finance this arrangement every time they pay a claim. The PBM has already baked the consultant’s kickback into the pricing model. So while employers think they are saving money by leveraging their consultant’s guidance, they are actually footing the bill twice, once in the consultant’s fee and again in higher drug spend.
Erosion of Trust
The foundation of the employer-consultant relationship should be trust. When PBM money changes hands behind the scenes, that foundation cracks. Employers are left questioning whether recommendations are objective or tainted by hidden incentives.
This backchannel compensation undermines the fiduciary standard of care, a standard that requires consultants to put their client’s interests first. Without transparency, the process of procuring pharmacy benefits becomes less about outcomes for employees and more about profits for middlemen.
Preventive Action Steps
Employers do not have to accept this as the norm. There are practical steps to reduce risk and protect plan assets:
- Demand full fee disclosure: Require consultants to provide written confirmation of every dollar they receive, both from you and from third parties like PBMs.
- Add audit rights: Include language in your agreements that allows you to audit consultant compensation streams at any time.
- Require fiduciary attestations: Hold consultants accountable by requiring a signed fiduciary pledge affirming they act solely in your best interest.
- Tie compensation to outcomes: Pay consultants directly for performance measures you define, not indirect incentives from PBMs.
- Engage independent reviewers: Use a third party to review PBM contracts and validate that recommendations are not conflicted.
Sample Consultant Agreement Language
To protect against PBM subsidies, employers should build safeguards directly into their consultant agreements. Consider adding questions or clauses such as:
- Disclosure Clause: “Please disclose all forms of direct or indirect compensation you receive from PBMs, drug manufacturers, or related vendors.”
- Conflict of Interest Statement: “Confirm whether your firm accepts any incentives, subsidies, or payments from PBMs. If yes, provide full details.”
- Fiduciary Requirement: “Consultant agrees to act as a fiduciary to the plan sponsor, representing only the interests of the employer and plan participants.”
It is fundamentally counterintuitive for a PBM to be charged with cost-containment, then turn around and pay a consultant who is supposed to hold that same PBM accountable. That arrangement does not encourage oversight. It encourages silence. If your consultant is being funded by the very entity they are tasked with monitoring, the game is rigged from the start. Employers must take control of the process, demand financial transparency, and refuse to let backdoor deals shape benefit decisions. Anything less is a disservice to the plan and the people who depend on it.
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 spend. Register today to join a growing network of professionals shaping the future of pharmacy benefits management. Learn more at the Pharmacy Benefit Institute of America.
