In the world of pharmacy benefits, the term “rebate” often gets bandied about as though it’s synonymous with savings. But in many cases, what looks like savings is not what it seems. We believe it’s time to pull back the curtain on rebates, explain their long-term impact, and highlight why our transparent, fiduciary model makes all the difference.
The Pharmacy Rebate “Shell Game”
When a drug manufacturer brings a product to market, a list price is established. A portion of that list price may later be given back to the payer via a “rebate” negotiated through the pharmacy benefit manager (PBM). This sounds straightforward: you pay a high price, you negotiate a rebate later, and you net a lower price. But in practice, the flow of money is complex, opaque, and often misaligned with the interests of the plan sponsor or the members.
For example:
A classic PBM model may negotiate rebates and keep a portion of that rebate as profit rather than passing 100 % through to the employer or plan.
The size of the rebate is often tied to the list price rather than the net effective cost or clinical value. Some drugs with high list prices generate large rebates, which may make them financially attractive to a PBM, even if those drugs are not the best value for the plan or the patient.
Because the rebate is paid after the fact, the plan or employer may still have paid or been exposed to the full list price upfront and borne the risk of that higher cost.
In short, rebates can become part of a shell game; the terminology makes it sound like you saved money, but unless the structure is transparent and aligned to your interests, you may not realize the benefit you expect.
The Long-Term Impact of Pharmacy Rebate Models
The misalignment created by rebate-centric models has several long‐term implications for employers, plan sponsors, and members:
Higher list prices – Because rebates are tied to list price, manufacturers have an incentive to set or maintain high list prices to generate larger rebate potential. PBMs may favor drugs with big rebates because their revenue depends in part on chasing those rebates. Analysts have flagged how this “chase the rebate” incentive can drive drug prices.
Formulary distortions – If drug placement on a formulary is influenced by rebate size rather than clinical value or lowest net cost, plans may end up covering higher‐cost alternatives. That means increased employer spend and possibly higher out-of-pocket costs or less-optimal therapy for the member.
Incentivized high-cost utilization – When plan sponsors or advisors use traditional “rebate spreadsheets” to compare PBMs and focus on the highest rebate guarantees, they unintentionally reinforce this dynamic. Choosing a PBM based on the largest rebate promise means the PBM must manage utilization toward the highest-cost drugs, since those are the products that generate the largest rebate checks. Over time, this approach not only distorts formulary design but also entrenches high-cost utilization patterns that inflate overall spend and undermine true savings.
Delayed benefit to the plan sponsor – Because rebates are retrospective, there is a lag time, and in some models, the plan sponsor may never clearly see or receive the full rebate value or understand how it was retained or split.
Transparency and fiduciary risk – Plan sponsors have fiduciary responsibilities (especially for self-funded plans under ERISA). When rebates, fees, dispensing profits, and other revenue streams are opaque, the plan may be at risk of hidden costs or conflicts of interest.
Unsustainable cost curves – If the model encourages high list prices and large rebates, the baseline cost of drugs grows, putting long‐term pressure on premiums, benefit design, member cost share, and employer budgets.
In essence, when rebates are treated as a “win” without drilling into the mechanics, you may be celebrating a gain while missing underlying structural issues that will catch up later.
How US-Rx Care’s Transparent Model Fixes the Problem
US-Rx Care’s model is built around transparency, alignment, and long‐term value. Here’s how we ensure rebates aren’t hiding costs, but instead support cost-effective outcomes:
Fiduciary alignment and flat fee contracting: We operate as a fiduciary PBM; our model is structured so that the plan sponsor’s interests come first. We don’t retain hidden rebates or manipulate margins to our advantage.
No conflicts of interest: Unlike traditional PBM models that may have opaque revenue flows, our contract is built on the principle of no hidden profits, no spread pricing, no rebate retention, just aligned savings.
Clinical-driven formulary and utilization design: We don’t let rebate size drive decisions; we let clinical value, efficacy, and net cost drive decisions.
Full transparency in reporting: Plans get auditable, clear reporting so they know exactly what they’re paying, what’s being reimbursed, and how savings are flowing.
Sustainable savings: Because we fix the misaligned incentive structure, we don’t just push short-term gains; we build models that control drug spend in the long run, protect against inflationary pricing, and align member care with cost value.
For employer groups, health plans, and benefits advisors, this means a model where the word “rebate” is no longer the source of confusion or hidden costs, but simply one part of a clearly defined value chain.
Key takeaways for Benefits Advisors and Plan Sponsors
Rebates don’t always equal savings. They often mask higher costs and misaligned incentives. Plan sponsors should dig deeper by asking who keeps the rebate, how list prices are affected, and whether rebate structures truly align with their fiduciary duty.
Transparency is the key to real cost control. PBM contracts should clearly define what revenue the PBM retains and how savings are passed through. Focus on net cost, not gross price minus rebate, and evaluate whether drug choices are driven by clinical value or rebate size. In the long run, rebate-heavy models inflate prices and erode savings. A transparent, fiduciary-aligned PBM ensures every dollar saved genuinely benefits the plan and its members.
A Better Way Forward: Pharmacy Transparency That Delivers Real Savings
If you’re tired of rebate gimmicks, hidden markups, and opaque PBM models, it’s time for a refresh. Let’s talk about how US-Rx Care’s fiduciary-based, transparent pharmacy benefit model can help you eliminate waste, control costs, and improve member outcomes without sacrificing care. Connect with us today at usrxcare.com/contact.
At US-Rx Care, we believe that healthcare should work for those who fund it and those who rely on it—not the middlemen. As pharmacy costs spiral and traditional PBM models continue to fall short, health plans have a powerful opportunity: to take the lead in reshaping the future of pharmacy benefits.
The landscape is changing. Now is the moment for bold decisions, clear accountability, and smarter pharmacy benefit strategies that put members and plan sponsors first.
Pharmacy Benefits at a Crossroads
Health plans are facing increasing pressure to rein in prescription costs while delivering better outcomes. But the playbook has changed. Here are four key trends defining the future of PBMs—and why health plans are best positioned to drive meaningful change:
Transparency Isn’t a Perk. It’s a Requirement
Gone are the days of complex contracts and black-box pricing. Today’s employers and plan sponsors demand clarity—and they deserve it. Traditional PBMs often profit from hidden markups, retained rebates, and misaligned incentives. That model is outdated and unsustainable.
Specialty Medications Are Reshaping the Cost Curve
Specialty drugs make up a small fraction of prescriptions—but they dominate total spend. Plans need more than discounts. They need clinical oversight, formulary integrity, and precision strategies that ensure the plan and plan members’ interest are placed above the PBM’s.
Data Is the New Advantage
Advanced analytics are powering a new era of proactive pharmacy management. From identifying savings opportunities to reducing waste and improving adherence, data is helping health plans move from reactive to strategic.
A Fiduciary PBM Built to Serve Plans, Not Profits
US-Rx Care was founded on one guiding principle: to be a true fiduciary partner. That means no hidden revenue, no conflicts of interest, and no games with the data. Just measurable results and total alignment with the plan sponsor’s own fiduciary role.
Here’s how our model is different—and why it matters to your plan:
Flat-Fee Contracting: Transparent pricing with no hidden revenue streams or incentives.
Zero Conflicts of Interest: We don’t retain rebates, manipulate formularies, or profit from your drug spend.
Clinically Driven Optimization: Every decision we make is rooted in clinical integrity and long-term member health—not margin.
Savings That Stick: Our fiduciary model consistently reduces total pharmacy spend by 30–50%, without compromising care or access.
With US-Rx Care, you’re not just outsourcing a service—you’re gaining a fiduciary partner who shares your mission and puts your plan and plan members first, always.
Leading from the Front
Pharmacy benefit reform won’t come from the status quo. It starts with forward-thinking health plans willing to challenge conventional models and demand better for their members. The future belongs to those who take control—who ask the tough questions, push for true transparency, and demand that every dollar delivers value.
At US-Rx Care, we’re here to help you lead that charge.
If you’re ready to break away from outdated PBM models and build a pharmacy strategy that works for your members, your mission, and your margins—let’s talk fiduciary.
According to recent study by Business Group on Health and the Kaiser Family Foundation, 90% of large employers believe that the cost of employee-sponsored healthcare and pharmacy benefits will become unsustainable within the next decade.
A major contributing factor is the cost of prescription drugs, which has risen 9% annually over the past ten years. For employers, this trend has increased the cost of healthcare for plans. For employees, it translates to higher deductibles and copays.
A Reality Check
As the healthcare marketplace continues to rapidly evolve, including rising costs, employers and benefit advisors are facing growing pressure to keep costs down while continuing to provide high-quality care to employees.
When it comes to controlling the cost of prescription drugs, pharmacy Benefit Managers (PBMs) have long been at the center of this challenge, but the traditional PBM model, often driven by profits, hasn’t always been in the best interest of member care or the employer’s bottom line.
This is where the fiduciary PBM model comes into play, offering a transformative solution that not only benefits the bottom line, but also prioritizes the well-being of members.
The Big Difference the ‘F’ Word Can Make
A fiduciary PBM is a one that is legally and ethically required to put the interests of its clients above all else, including its own profits. Unlike traditional PBMs, which may have conflicts of interest and profit incentives tied to formulary decisions, pricing, or rebates, fiduciary PBMs operate with complete transparency and a member-first philosophy, focusing solely on the best interest of the employer and plan members.
This means that there are no hidden rebates or kickbacks that benefit the PBM at the expense of plan nor any profits from dispensing medications. It’s about providing the most effective and affordable medications to employees and ensuring that they get them at the lowest possible cost. This typically results in a 30%-50% reduction in plan spend per member per month (PMPM)—with no change in benefit design—and a 30% (or more) reduction in out-of-pocket cost for plan enrollees.
Why is This Alignment with Member-First Principles So Important?
The importance of a member-first approach cannot be overstated. For employers, offering a benefits plan that focuses on the health and satisfaction of employees can improve workforce productivity, reduce absenteeism, and promote overall well-being.
In the long run, that means lower healthcare costs and a more engaged population.
Cost Savings and Transparency
One of the most significant advantages of the fiduciary PBM model is the level of transparency it offers based on ERISA defined terms. Traditional PBMs and many “transparent PBMs” often have hidden fees, kickbacks from drug manufacturers, dispensing profits, and opaque pricing structures that inflate the costs for employers and members. This can result in inflated drug prices, higher premiums, and a general lack of clarity around the true cost of medications. “Transparency” is not a legal term. “Fiduciary,” as defined by ERISA and embraced by US-Rx Care, is legally binding, which is why plan fiduciary status is not accepted by traditional and transparent PBMs. It can’t be without violating its core principles inherent in those conflicted PBM models.
On the other hand, Fiduciary PBMs—like US-Rx Care—offer full transparency in pricing and reimbursement, working directly with employers to ensure the lowest possible costs for prescription drugs while maintaining high-quality care. By eliminating conflicts of interest, fiduciary PBMs also pass 100% of savings directly onto employers and members. This means that employers can expect better value from their pharmacy benefits program, and employees will benefit from lower out-of-pocket costs and better access to the medications they need.
Impacts on Future Growth
The fiduciary PBM model isn’t just about saving money in the short term—it also sets the stage for sustainable, long-term growth for both employers and their members. By maintaining transparency and focusing on cost-effective solutions, employers are able to reinvest the savings into other areas of their business, whether it’s improving employee benefits or income, enhancing health programs, or even offering more comprehensive care options.
It’s truly a win-win!
By prioritizing the long-term needs of their clients and members, fiduciary PBMs are also better equipped to navigate the evolving healthcare landscape and provide solutions that can scale with the growth of the organization. This unique future-proof approach helps employers plan for tomorrow while addressing the needs of today.
The US-Rx Care Solution
Since our founding in 2007, US-Rx Care has built our fiduciary model around the core principles of ERISA-defined transparency and conflict-free accountability in the best interest of the plan and enrollees always. With no conflicts of interest, no misaligned profit incentives, no benefit constraints, and no waste, employer groups can trust that they’re getting the best deal and best outcomes possible.
If you’re ready to make the shift toward a fiduciary PBM solution that effectively mitigates risk while offering substantial savings and better long-term outcomes, let’s talk about what US-Rx Care can deliver for you.
In the meantime, click below to see how our model helped a multi-state hospital group save more than $10 million in annual drug costs!
Over the past several years, the PBM landscape has shifted significantly—and that rapid shift continues today. What was once considered satisfactory, or part of the status quo, is simply no longer acceptable. And we’re not just talking about industry “buzzwords” that have largely gone the way of the cliché. But let’s start there.
The Fall of “Transparency”
While not a legal term, “transparency” is, without a doubt, one of the most overused, over promised, and severely underdelivered concepts in the health benefits space—but particularly in the PBM world. While anyone can say they’re transparent, or claim to deliver the “most” transparent services, what does that actually mean? Well, that can vary tremendously.
The fact is, it’s all relative. While a PBM can be transparent, that doesn’t mean they have a client’s best interest as their top priority. To put it bluntly, they’re often just open about revenue sources (and claim that to be “total” transparency). For the client, however, that doesn’t mean much at all for their bottom line—as these PBMs can still engage in undisclosed spread pricing, rebate-driven revenue models, and markups.
The Rise and Thrive of Fiduciary
With a marketplace demanding more, fiduciary PBMs—like US-Rx Care—have become the clear alternative to the status quo. For fiduciary PBMs, who are contractually obligated to act in the best interest of every client, transparency, fairness, trust, and accountability aren’t just buzzwords that marketers throw around—they are guarantees.
With the fiduciary model, every dollar spent for PBM services MUST be compliant with these contractual obligations. This means the client’s money is only spent on cost savings and service fulfillment. There are no “gotcha” moments. All compensation sources, including rebates, administrative fees, and other revenue streams are clearly disclosed.
The Water Bill Metaphor
Think of the traditional “transparent” vs. fiduciary PBM argument like your monthly water bill. The bill is transparent in the sense that you can see what your total bill is, but you may not necessarily have insight to where every dollar is going or what you’re ACTUALLY paying for. Think of it as “additional” or “admin” fees. But, regardless, you continue to pay to ensure that you have water to use.
Under a fiduciary contract, you would know for certain that you’re getting the best rate possible and that every dollar you are spending is being used to work in YOUR best interest—not to line the pockets of the water company or pay for things that don’t serve any purpose for you directly.
Building an Effective Fiduciary Strategy
Fiduciary PBMs are important today because they provide a more ethical and cost-effective approach to managing prescription drug benefits, which is crucial for controlling the rising costs of healthcare.
An effective fiduciary strategy means full pass-through pricing (no surprises—knowing where every dollar is going), no spread pricing (charging more for drugs just to make a profit), an alignment of interests between the client and the PBM, along with independent and unbiased formulary management.
The result? TRUE transparency, lower long-term costs, and better health outcomes for patients.
Let ‘s talk about what our unique fiduciary approach at US-Rx Care can deliver for you and your clients!
