Introduction: Traditional PBMs and the Status Quo

Pharmacy Benefit Managers (PBMs) have long occupied a critical role in determining patient access to prescription medications. Under the existing structure, a handful of major PBMs broker deals between drug manufacturers, pharmacies, and health plans. While this system initially promised cost savings and efficiency, it has also created significant transparency and conflict-of-interest concerns. As calls to decentralize coverage decisions grow louder, many are questioning whether a new model could address the cracks forming in the current landscape.

A Brief History of PBMs

The modern PBM industry began in the 1960s when health insurance providers realized they needed intermediaries to process prescription drug claims. Over the following decades, PBMs secured powerful negotiating positions, leveraging their ability to steer patient volume toward preferred manufacturers and pharmacies. However, with these expanded responsibilities came increased complexity, often leading to opacity in pricing structures and rebate arrangements. Patients, providers, and even smaller payers found themselves on the outside looking in, unable to see how—and why—certain drugs got prioritized or discounted.

Pain Points: Rebate Games, Opaque Pricing, and Disempowered Patients

Despite their origins in cost management, many PBMs now face criticism for perpetuating practices that may inflate overall healthcare expenses.

• Rebate Games: Deals struck between PBMs and manufacturers often involve confidential rebates. These savings are not always passed on to the plan sponsor or patient, creating an environment where higher-priced drugs can be favored if they offer more lucrative rebates.
• Opaque Pricing: Negotiations behind closed doors leave patients and smaller payers in the dark. Without clear visibility, determining the true cost of a medication can feel impossible.
• Disempowered Patients: As formularies shift based on contractual agreements, patients and providers may have few real choices in their drug therapy options. Access can quickly become a negotiation tool, rather than a patient-centered decision.

Early Signs of Change: Employers and Plans Seeking More Control

Recent years have witnessed a growing pushback from employers, plan sponsors, and other stakeholders who feel underserved by the status quo. Large companies increasingly demand more transparency and accountability. Some are experimenting with carving out certain drug classes from PBM contracts, while others pursue direct negotiations with manufacturers. This attempt to bypass traditional gatekeepers underscores a fundamental yearning for greater autonomy and clarity in drug coverage arrangements.

The “Line in the Sand” Negotiations

When PBMs and manufacturers each seek maximum leverage, patients and smaller payers become collateral. Manufacturers aim to secure favorable formulary positioning, while PBMs push for rebates and discounts. The result can be a tenuous balance that rarely yields genuine cost savings for the end user. These heightened standoffs show that the centralized model may no longer be sustainable long-term.

Conclusion: Setting the Stage for a Node-Based Coverage Model

In many other industries—from banking to social media—decentralization has become a way to foster transparency and distribute decision-making across multiple stakeholders. For pharmacy benefit management, a node-based coverage model might achieve similar ends. Think smart contracts, like what Ethereum has executed and inspired. By allowing different groups—employers, health plans, provider networks, and even patient advocacy organizations—to participate in formulary rate negotiation for coverage decisions, the market could introduce healthy competition and mitigate conflicts of interest.

Going forward, this 8-part series will explore how distributing coverage determinations among a vast node network can redefine the PBM space. From potential governance structures to technology platforms that enable collaboration, each article will showcase why—and how—drug coverage might shift away from centralized gatekeepers. If the current system has proved anything, it’s that we need a fresh approach. By embracing transparency, decentralization, and increased competition, a new chapter in pharmacy benefit management could be on the horizon—one that empowers patients, providers, and payers alike.