Pharmacy benefit managers (PBMs) are disclosing more than ever, but benefits brokers still cannot tell their clients what a prescription will cost at the pharmacy counter.
That is the central argument of Raechele McMahan, senior vice president of Payer Solutions at Prescryptive Health in Chicago, who says the wave of new federal transparency requirements, while overdue, does not solve the problem brokers and plan sponsors actually face.
"A PBM can say they're going to disclose a rebate," McMahan told Insurance Business Benefits US. "That doesn't necessarily mean you have a choice or control to change that process."
Her comments come as federal regulators tighten the rules. On January 30, 2026, the Department of Labor (DOL) issued a proposed rule requiring PBMs and affiliated brokers and consultants to disclose their compensation - including rebates, spread pricing, and administrative fees - to fiduciaries of self-insured group health plans subject to the Employee Retirement Income Security Act (ERISA).
The rule implements section 12 of President Trump's Executive Order 14273 and was proposed to take effect for plan years beginning on or after July 1, 2026. The Consolidated Appropriations Act, 2026 (CAA 2026), signed in February 2026, added further rebate pass-through and reporting requirements directly into law, but this is not due to be in force until January 2029.
For benefits brokers, the twin regulatory developments raise a question McMahan believes the industry has not yet answered: disclosure of what, exactly, and to what end?
The rebate structure at the center of PBM economics is rarely as straightforward as it appears on a spreadsheet. McMahan explained that PBMs negotiate rebates directly with drug manufacturers but whether those rebates actually flow to the employer plan sponsor depends heavily on the size of the group and the terms of the PBM contract.
"Just because a drug manufacturer is paying, let's say, a 50 percent rebate, it doesn't mean that those sub-10,000 group employers are getting the benefit of that 50 percent rebate," she said.
The structural problem deepens for PBMs that operate their own specialty pharmacies. Where a PBM is vertically integrated - owning both the formulary management function and the dispensing arm - the decision about which drugs are approved and routed through that pharmacy can be shaped by the rebate that drug generates for the PBM.
"There are levers that are turned on and off on how do you kind of ramp up what will get approved and then go through the specialty pharmacy dispensing arm,” McMahan said.
Even transparent PBMs that pass through 100 percent of rebates and disclose their network costs do not fully resolve this problem. The question McMahan says employers and their brokers still cannot reliably answer is whether switching to a lower-cost drug will actually guarantee a member the lowest net out-of-pocket cost. Under most current arrangements, the answer is no.
"Generally, I don't know how much I'm going to pay. And if I go to one drugstore on this corner and if I go to one two miles down the street, I'm probably going to pay something different," she said.
The broker's role in PBM selection is also flawed, McMahan believes, with the analytical tools most brokers and consultants use to evaluate PBMs built around a framework that is increasingly out of date.
"They have amazing analytic tools to ingest claims data. They have algorithms that sit on top of that. And they are mainly structured around what is the rebate and what is the discount of the drug," she said.
That framework can make a traditionally structured PBM appear to be the lowest-cost option on paper while obscuring meaningful savings that newer PBM models can deliver. It also creates a structural bias toward incumbents - the three dominant PBMs owned by large insurance conglomerates, sometimes referred to as the Big Three. Express Scripts, CVS Caremark, and OptumRx together processed approximately 79 percent of all US prescription claims in 2022, according to the National Association of Insurance Commissioners (NAIC), giving them outsized leverage in any broker's analytical model built around rebate-and-discount performance.
McMahan is not accusing brokers of bad faith, but she says the problem is that the analytical models were built for a market that has since changed.
"We need to get rid of where they're [benefits brokers] being incentivized to bring business to certain PBMs," she said. "And we need to work with them on how they update their models to a new way of buying."
The concern is not new, but it is gaining urgency. Rick Kelly, national pharmacy lead and senior vice president of employee health and benefits at Marsh McLennan Agency in Raleigh, North Carolina, has described a related problem: many broker consultants operate coalitions or consortiums with PBMs that function as quasi-joint ventures, creating compensation arrangements that can influence which PBM a client is steered toward.
In an IBB interview in September 2026, Kelly argued that the PBM conflicts brokers should be talking to clients about begin with those undisclosed financial relationships and that clients often have no way of knowing they exist.
The DOL's proposed rule addresses this directly: it would require disclosure of indirect compensation paid by PBMs to brokers and consultants, a provision aimed at surfacing the financial relationships that can influence PBM recommendations.
For self-insured plan fiduciaries, failure to evaluate PBM compensation could expose both the PBM and the plan sponsor to enforcement action under ERISA. For brokers who advise employer clients on pharmacy benefit strategy, the conflict-of-interest question is no longer theoretical.
McMahan's argument is not that regulation alone will close the PBM transparency gap. She is more interested in technology that delivers actionable cost information to the member at the moment they need it, not when they enrolled in their benefits plan.
"I didn't even think about something that I might need in the new year for my child, my family member. So how can I leverage this technology to debunk disclosure, transparency, rebates, cash pricing - allow me to get it when I need to get it?" she said.
The analogy she reaches for is e-commerce where consumers can now compare prices across multiple retailers simultaneously or hail a ride knowing its cost upfront. The goal she sees is to surface real-time, individualized prescription cost data at the point of prescribing. New market entrants - including direct-to-consumer pharmacy programs and cash pricing models - add further variables that members should be able to weigh in real time, rather than having to navigate blind at the pharmacy counter.
But she draws a clear line between consumer choice and consumer protection. On individual coverage health reimbursement arrangements (ICHRAs) she supports the direction but flags a risk that brokers advising employer clients should factor into their plan design conversations.
"You shouldn't necessarily say, well, I'm going to take my money that I have, and I would really prefer to go get a weight loss GLP-1, even though I don't need it. But I don't really want to go get my medication that I should be taking for my multiple sclerosis."
ICHRAs, in her view, need guardrails particularly for members facing catastrophic or chronic diagnoses where the stakes of a wrong spending decision are not reversible. For a benefits broker advising an employer on defined-contribution plan design, that guardrail question is as important as the headline contribution amount.
For benefits brokers, McMahan's analysis points toward a set of practical obligations that the regulatory environment will increasingly enforce.
First, understanding a PBM's vertical integration matters as much as its headline rebate figure.
Whether a PBM owns specialty pharmacies, and how formulary decisions interact with dispensing incentives, are questions that a rebate-and-discount analytical model is not designed to answer.
Second, the broker's own compensation must be examined: under the DOL's proposed rule, indirect payments from PBMs to brokers and consultants will be subject to the same transparency requirements as PBM fees disclosed to plan fiduciaries.
Third - and this is where McMahan expects the most resistance - brokers will need to update the models they use to evaluate PBM proposals. Newer PBM structures that are not vertically integrated with the Big Three may not score as well under rebate-and-discount frameworks, even when they can deliver better outcomes for both the employer and the member.
"Nothing is 100 percent," McMahan said. "But I believe that alignment will start getting into the right spot. We have to help them do their jobs better on how the industry has changed."
As for the Big Three, McMahan does not predict their displacement. What she does expect is structural change. "The structure of what they look like in the future will be different," she said, pointing to the convergence of new regulatory requirements, technology-driven competitors, and a slow shift in incentive structures toward wellness and prevention rather than acute event management.
Prescryptive Health, where McMahan serves as senior vice president of Payer Solutions, operates as a PBM built on commerce infrastructure technology rather than a traditional pharmacy benefit management stack.
The company connects to e-prescribing systems and delivers individualized drug cost and option data to members at the point of prescribing before the prescription is routed to a pharmacy. Prescryptive does not own pharmacies, a structural choice McMahan says removes the vertical integration incentive conflict that she argues distorts formulary decisions at the Big Three.
For brokers, the practical question is whether their current PBM evaluation process is built to surface that difference.
