Rising prescription drug costs have become one of the most persistent pressure points in employer-sponsored health care. For many organizations, pharmacy spending now accounts for as much as a quarter—or more—of total health care costs, with limited visibility into what’s actually driving those increases. As new drug categories emerge and traditional pricing models grow more complex, employers are increasingly questioning whether higher costs are inevitable—or structural.

That challenge was the focus of a recent From Day One webinar about “Rethinking Pharmacy Benefits: Cutting Costs, Improving Care.” The session explored how pharmacy benefit managers (PBMs) shape prescription costs, where traditional models fall short, and how more transparent approaches may help employers rein in spending while improving access to care.

Session moderator, Abigail Abrams, the director of content operations at Atria, set the stage with a reality many employers already recognize: pharmacy benefits have grown rapidly, often faster than other components of health care spend.

Alissa Johnson, senior director of clinical strategy at SmithRx, pointed to several forces behind that trend. One is innovation. “One of the greatest things that have happened is tremendous innovation,” she said, noting that the United States develops “around 80% of the world’s new drugs.” New treatments have expanded what’s clinically possible, but often at a higher price.

Another factor is where care is delivered. Many treatments that once required hospital or outpatient infusions are now available as self-administered injections or oral medications taken at home, says Johnson. While that shift can improve convenience and outcomes, it also moves more spending into the pharmacy benefit, increasing employers’ exposure to drug costs.

The Transparency Problem in Traditional PBM Models

Traditional PBM pricing structures can obscure true costs. Johnson described the industry as one in which a single drug can have multiple price points, from list prices to discounted rates and negotiated rebates.

“There’s just a lot of different mechanisms to not have the PBMs be transparent, or offer visibility into what the actual drug costs are,” she said. Vertical integration, where PBMs may also own pharmacies, specialty distributors, or have financial ties to manufacturers, can further complicate incentives.

Johnson likened discount-based pricing to a misleading retail analogy. A drug might appear inexpensive because it’s offered at a steep percentage discount off a high list price, even if a lower net-cost alternative exists elsewhere. “What you really want to know is how much you’re paying at the end of the day,” she said.

A recurring theme throughout the session was the importance of shifting from discount-based metrics to cost-based ones. Johnson encouraged employers to start by insisting on access to their own claims-level data. “Your data is yours,” she said.

One simple but powerful metric, she says, is per-member-per-month (PMPM) pharmacy spend. By dividing total drug costs by the number of covered members, employers can track real spending trends without getting lost in rebate guarantees and contractual fine print.

Johnson shared examples of employers that switched from legacy PBMs to more transparent models and saw significant reductions in both plan costs and employee out-of-pocket expenses. In one case, she said, PMPM costs dropped from $65.57 to $48, while average out-of-pocket spending fell from $12.90 to $6.

Cost transparency isn’t just a financial issue—it also affects whether employees can access and adhere to their prescribed treatments. Johnson emphasized that when medications are unaffordable, people simply don’t take them, which can lead to worse health outcomes and higher medical costs over time. “If patients can’t afford their drugs, they won’t fill them and they won’t take them,” she said.

She also addressed the role of utilization management tools like prior authorization. While such measures can be important safeguards, Johnson says that they can become unnecessary barriers when approval rates are effectively universal. In those cases, she says, removing prior authorization can reduce friction for both patients and providers without increasing risk.

High-Cost Categories: GLP-1s, Biosimilars, and What’s Next

Johnson also shared insights on drug categories drawing heightened employer attention, including GLP-1 medications for diabetes and weight loss. Johnson described them as “a drug class of interest for a long time,” given their effectiveness and growing list of potential indications. At the same time, she cautioned that broad utilization makes guardrails and data visibility essential.

Another area of focus was biosimilars, lower-cost alternatives to biologic drugs used to treat conditions such as autoimmune diseases. Johnson urged employers to ask not just whether their PBM offers a biosimilar-first strategy, but how effectively it’s implemented.

“Not all biosimilars are created equal,” she said, noting that some still cost thousands of dollars per month while others are available for a fraction of that price. Conversion rates, she added, can be a more meaningful measure than policy statements alone.

Throughout the session, Johnson returned to a consistent message: employers don’t have to wait for regulatory reform or litigation outcomes to demand more clarity. Asking the right questions now, about data access, net costs, sourcing options, and reporting cadence, can reveal whether a PBM’s incentives are truly aligned with controlling spend and supporting employee health.

As the webinar concluded, the message was less about any single solution and more about a shift in mindset. Transparency, Johnson suggested, isn’t an abstract ideal—it’s a practical tool for understanding where pharmacy dollars go and how benefits strategies can evolve to meet both financial and human needs.

Editor's note: From Day One thanks our partner, SmithRx, for sponsoring this webinar. 

Chris O’Keeffe is a freelance writer with experience across industries. As the founder and creative director of OK Creative: The Language Agency, he has led strategy and storytelling for organizations like MIT, Amazon, and Cirque du Soleil, bringing their stories to life through established and emerging media.

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