Employer pharmacy benefit plans are generating savings for plan sponsors while shifting more of the cost burden onto employees at the pharmacy counter, according to a new analysis of KFF’s 2026 Employer Health Benefits Survey.
The analysis comes from Drug Channels Institute (DCI), an HMP Global company. Its review covers KFF survey data from 1,937 private and non-federal public employers and examines how tier structures, cost-sharing formulas, rebates, and manufacturer assistance programs divide pharmacy costs between plans and patients.
The central tension is not about whether employers are negotiating better deals. Many are. The question is who actually benefits from those deals.
The structure of a pharmacy benefit plan determines whether savings flow to the plan or to the employee at the counter. The KFF survey data shows the two most common plan types handle this very differently.
Among workers enrolled in non-HSA-qualified plans, 71% are covered by plans with four or more prescription drug tiers, and the majority face fixed-dollar copayments across the first three tiers. That structure gives employees predictable, stable out-of-pocket costs regardless of a drug’s list price.
HSA-qualified plans look simpler on paper, with 41% of covered workers having four or more tiers, but they carry a significantly higher rate of coinsurance. Among workers in those plans with at least three tiers, 52% face coinsurance on preferred drugs, compared with 15% in non-HSA plans. For nonpreferred drugs, the split is 51% versus 21%.
The difference comes down to how coinsurance is calculated. A copayment is a fixed dollar amount. Coinsurance is a percentage of the drug’s negotiated price between the pharmacy and the payer, a price that typically excludes manufacturer rebates paid after the transaction. When a plan collects a rebate that reduces its net drug cost, an employee paying coinsurance does not benefit. Their bill is calculated against the pre-rebate price, and the savings land with the employer or the pharmacy benefit manager (PBM).
DCI estimated that plans and their vendors capture roughly $6.5 billion of manufacturers’ copay support funds annually, redirected away from patients and toward plans and PBMs. That figure represents roughly 28% of the approximately $23 billion in manufacturer copay assistance distributed each year, according to IQVIA. Both copay accumulator and maximizer programs contribute to this capture, absorbing funds intended to reduce patients’ out-of-pocket costs before they reach the pharmacy counter.
PBMs have long faced scrutiny for passing through less than the full value of manufacturer rebates, particularly for smaller employer groups. Even after the latest round of federal PBM disclosure requirements, a benefits broker advising a self-funded employer still cannot reliably tell a client what a given prescription will cost a member at the pharmacy counter.
What the Drug Channels analysis adds is a sharper look at the benefit design layer. The tier structures and cost-sharing formulas that sit below the PBM contract shape member-level costs in ways that rebate disclosures don’t capture. An employer can receive improved rebate terms and report lower net drug spend while simultaneously exposing employees to higher coinsurance on the same prescriptions.
Coinsurance set against a pre-rebate price, combined with accumulator programs that prevent manufacturer assistance from counting toward deductibles, can produce a situation where an employee’s effective share of a drug’s cost is substantially higher than the stated coinsurance percentage suggests.
The Drug Channels analysis puts a sharper point on a question that has dogged employer pharmacy plans for years. For each claimed saving, how much reduces the employer’s liability, and how much reduces the employee’s out-of-pocket payment? Those two figures can move in opposite directions, a dynamic that employers tracking rising pharmacy rebates alongside rising pharmacy costs are already navigating at renewal.
The Drug Channels analysis is careful about its limits. Benefit design data describes tier structures and cost-sharing formulas. It does not establish which plan type produces the highest annual spending for every employee. Deductibles, premiums, employer HSA contributions, out-of-pocket maximums, and the specific drugs a member uses all affect the full cost comparison. An HSA-qualified plan with high coinsurance rates can still be the right choice for a healthy employee who contributes consistently to their account and rarely uses brand-name drugs.
The issue is not that coinsurance plans are inherently bad, or that employer savings are illegitimate. The issue is whether the advisor has the full picture, and whether the employer’s pharmacy benefit review process is designed to surface these trade-offs.
The PBM disclosure requirements introduced through the Consolidated Appropriations Act of 2021 and updated through subsequent Department of Labor rulemaking, including a proposed fee disclosure rule published in January 2026, are designed to make more of this information visible. But disclosure of a rebate amount does not automatically give an employer control over how that rebate affects the plan design or what members actually pay.
For self-funded clients heading into 2027 renewals, the design questions are as important as the rebate summary. What price is coinsurance calculated against, do accumulator or maximizer programs apply, and how does manufacturer assistance flow through the plan? A nonprofit-developed scorecard giving brokers a framework for evaluating PBM contracts addresses each of these gaps.
The Drug Channels data suggests those questions are not yet standard practice across the market, but the cost gap between what plans report and what employees pay at the counter is documented and growing.
