How Large PBMs Make Money Today: A 2025 Drug Channels Update (rerun)

This week, I’m rerunning some popular posts while I prepare for Friday’s live video webinar: Drug Channels Outlook 2026 .

Today's rerun provides valuable context for the webinar, when I will discuss how the large PBMs' profit model will be changing in the coming years. Click here to see the original post from May 2025.

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During my PBM Industry Update: Trends, Challenges, and What’s Ahead video webinar, I explored the latest trends, emerging data, and strategic shifts transforming the pharmacy benefit management (PBM) industry.

In the video clip below, I explain how PBM compensation models continue to evolve:

• Traditional profit sources, such as mail dispensing of nonspecialty drugs and retained rebates, have become less significant.

• Retail network spreads now account for a small portion of large PBMs’ overall profits.

• Specialty dispensing profits, manufacturer administrative fees, and revenues from group purchasing organizations (GPOs) have emerged as major contributors to PBM profitability.

Can’t see the video? Click here to watch the PBM compensation models clip.

Understanding how PBMs generate profits is key to navigating the evolving drug channel landscape. Watch the full webinar replay and download the complete slide deck to explore these dynamics in more depth.

For a more comprehensive analysis of the forces transforming PBMs, see DCI’s 2025 Economic Report on U.S. Pharmacies and Pharmacy Benefit Managers.

Closing the Specialty Access Gap: How GoodRx Turns Intent Into Therapy Starts

Today’s guest post comes from Laura Jensen, Chief Commercial Officer and President, Pharma Solutions at GoodRx

Laura explores the structural hurdles that slow time-to-therapy and outlines practical ways stakeholders can streamline the path from prescription intent to treatment initiation.

To learn more, book a meeting with GoodRx.

Read on for Laura’s insights.

List Price Reductions Will Deflate the Gross-to-Net Bubble–and Threaten Pharmacy and 340B Profits from IRA-Negotiated Drugs

Contrary to popular belief, the Inflation Reduction Act’s (IRA) maximum fair prices (MFPs) could temporarily boost profits for retail pharmacies serving Medicare Part D patients.

The bad news? The IRA is also one of the five key forces deflating the gross-to-net bubble.

That’s why any IRA-related pharmacy profits will vanish if manufacturers lower list prices to be closer to net prices. At least 13 brand-name drugs—five of which have MFPs—reportedly plan to reduce list prices within the next two months.

As I show below, retail pharmacies risk becoming collateral damage from significant deflation in the gross-to-net bubble for drugs subject to an MFP. Welcome to our bonkers healthcare system—where everyone wants lower prices, until they actually get them.

What’s more, list price cuts will reduce profits from 340B contract pharmacy operations, while weakening covered entities’ main objections to a 340B rebate model. Get ready for a 340B slowdown.

For more on the intended and unintended consequences of the IRA—and its interplay with 340B—join me for my live video webinar, Drug Channels Outlook 2026, on December 12, 2025, from 12:00 p.m. to 1:30 p.m. ET.

The Hidden Burdens of Cancer Care: When Insurers Override Doctors

Today’s guest post comes from Josh Schwartz, Vice President, Medical Affairs, North America at BeOne Medicines and Matt Shaulis, General Manager, North America at BeOne Medicines.

Josh and Matt aim to raise awareness about the negative effects of insurer-imposed policies such as therapeutic substitution and step therapy. They argue that physicians have a deeper understanding of disease states and individual patient biology than insurance companies and pharmacy benefit managers (PBMs). To ensure the best outcomes, they contend that doctors—not insurers—should determine each patient’s optimal treatment plan.

Learn about BeOne Medicines, a global oncology company.

Read on for Josh and Matt’s insights.

Drug Channels News Roundup, November 2025: PBM Revolution, Cuban’s Stelara Challenge, Express Scripts’ Price Games, U.S. Drug Spending Reality, and the AFP Reckoning

Happy Thanksgiving, everyone! Before you stretch your stomach, stretch your mind with some fresh food for thought from across the drug channel. In this issue:

• Employers finally claim to want a PBM revolution

• Mark Cuban accelerates the Stelara biosimilar price war

• How Express Scripts’ private labels inflate generic drug prices

• U.S. drug spending: still middle of the pack

Plus: Has the day of reckoning arrived for shady alternative funding vendors?

P.S. Join my more than 66,000 LinkedIn followers for daily links to neat stuff, along with sharp and thoughtful commentary from the DCI community.

What else should you expect for 2026? Find out during my upcoming live video webinar, Drug Channels Outlook 2026, on December 12, 2025, from 12:00 p.m. to 1:30 p.m. ET. Click here to learn more and sign up. As always, we are offering special discounts if you want to bring your whole team.

The $700 Copay That Changed Everything

Today’s guest post comes from Stephen Hom, EVP, Chief Commercial Officer, and Co-Founder of RIS Rx.

Stephen argues that patient affordability remains one of the most critical—and often overlooked—barriers to treatment adherence. Drawing on his experience as a community pharmacist, he suggests that cost isn’t just a financial issue—it’s a clinical one.

To learn about RIS Rx’s Benefit Patient Solution (BPS) and other tools, request your savings snapshot.

Read on for Stephen’s insights.

Medicare Part D 2026: Preferred Networks Vanish as the PDP Market Collapses

As I’ve been warning for years, the Inflation Reduction Act of 2022 (IRA) has nearly obliterated the stand-alone Medicare Part D prescription drug plan (PDP) market.

DCI’s exclusive analysis of Center for Medicare & Medicaid Services’ (CMS) data reveals:

• The number of PDPs has plummeted by 55% since the IRA’s passage, to a record low of 360 plans for 2026.

• Preferred cost-sharing pharmacy networks are disappearing, with their share falling to the lowest level since 2014. That’s a post-IRA net loss of 505 plans with these networks.

• Just five companies—Aetna, Health Care Service Corporation, Humana, UnitedHealthcare, Wellcare—will account for 94% of all PDPs in 2026. In recent years, four major plan sponsors—Cigna, Clear Spring Health, Elevance Health, and Mutual of Omaha—have exited the PDP market.

See the charts below and our analysis of the remaining national players, along with updated data on preferred networks in Medicare Advantage prescription drug (MA-PD) plans.

Even with the demonstration program handouts, the Part D market is increasingly fragile: fewer choices, greater concentration, and massive disruption for beneficiaries.

Thanks, IRA! 🙃

What else should you expect for 2026? Find out during my upcoming live video webinar, Drug Channels Outlook 2026, on December 12, 2025, from 12:00 p.m. to 1:30 p.m. ET. Click here to learn more and sign up. As always, we are offering special discounts if you want to bring your whole team.

Drug Channels Outlook 2026: Live Webinar with Adam J. Fein, Ph.D., on PBMs, Part D, DTC Strategies, Drug Policy Trends, and More

2026 is shaping up to be another transformative year for the U.S. drug channel. Join Adam J. Fein, Ph.D.—president of Drug Channels Institute (DCI) and author of Drug Channels—for his exclusive live video webinar:

Drug Channels Outlook 2026
Live Broadcast:
Friday, December 12, 2025
12:00 p.m. to 1:30 p.m. ET

Register Now

Gain the latest data, forecasts, and policy insights to plan confidently for the year ahead. Our Outlook webinars are trusted annually by thousands of industry leaders for data-driven market insight. This 90-minute online event—part of The Drug Channels 2025 Video Webinar Series—streams live from the Drug Channels studio in beautiful downtown Philadelphia.

Jump to: What You Will Learn  •  Pricing Options  •  Important Things To Know

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What You’ll Learn

Start the new year with clarity and confidence. Dr. Fein—one of the industry’s most trusted voices—will share an essential briefing on the trends, market forces, and policy developments that will shape the U.S. drug channel in 2026 and beyond.

• Market & Policy Outlook: GLP-1 disruption; expectations for Medicare Part D; first-year implications of Medicare’s MFP implementation
• PBMs & Payers: Profit model evolution, transparency pressures, and the future of discount cards, TrumpRx, and direct-to-patient strategies
• Industry Integration: The evolving biosimilar market, wholesaler influence, and vertical integration trends for patient- and provider-administered drugs
• Regulatory & Legislative Changes: The future of the 340B Drug Pricing Program and state/federal PBM oversight

And much more!

As always, Dr. Fein will clearly distinguish objective facts and data from his interpretations. This 90-minute video webinar will include a dedicated Q&A session, where attendees can unmute and engage directly with Dr. Fein.

Reserve Your Spot

Read on for pricing, group discounts, and other details.

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Hubs, AI, and the New Era of Revenue Protection in Patient Access

Today’s guest post comes from Steve Randall, Chief Technology Architect at ConnectiveRx.

Steve examines how artificial intelligence (AI) is reshaping the role of patient support hubs in the specialty drug ecosystem. As policy, payer, and gross-to-net pressures mount, he argues that the hub model must evolve from a service function into a revenue-protection strategy—one that uses “embedded AI” to enhance, not replace, human judgment.

To learn more, download ConnectiveRx’s free eBook: 8 Questions Patient Access Leaders Should Ask About AI—But Aren’t. 

Read on for Steve’s insights.

As Pharma Faces Financial Pressure, Pharmacy Delivers Measurable Impact

Today’s guest post comes from Lara Loveman, VP of Pharma Solutions at Outcomes.

Lara discusses how shifting market forces and evolving reimbursement models are reshaping pharmaceutical marketing strategies. She suggests that pharmacist-led interventions—particularly in chronic disease management—can both protect pharmaceutical investment and drive better health outcomes.

Click here to learn about Outcomes’ pharmacist-led interventions solution.

Read on for Lara’s insights.

Cigna’s Rebate-Free Pharmacy Model: Three Realities Behind Its Latest Push to Pop the Gross-to-Net Bubble

On Monday, Cigna announced that it would be abandoning traditional manufacturer rebates and moving to a new, “rebate-free” approach—essentially a point-of-sale (POS) rebate model paired with a cost-plus pharmacy reimbursement framework. Here’s the press release.

Moving manufacturers’ rebates and discounts to the point of dispensing is a big win for patients, who can share in the savings that pharmacy benefit managers (PBMs) negotiate with drugmakers. It's a practical, patient-friendly step toward shrinking the gross-to-net bubble that has inflated out-of-pocket costs for years.

Yet as always, the fine print matters. Below are three crucial considerations that reveal why this move might be less revolutionary than it first appears—and why it may not be widely adopted by plan sponsors. Perhaps these will spark some questions for Cigna's management about the company's increasingly opaque profit model during tomorrow’s third-quarter earning call.

This isn’t the first time that Express Scripts has tried to alter how its plan sponsors manage their pharmacy benefits. After reading the analysis below, you can decide whether this latest attempt is true reform—or the triumph of hope over experience.

Drug Channels News Roundup, October 2025: Vertical Integration Woes, AFPs Gone Wild, Part D’s Decline, 340Bloat, and Dr. G’s ACIP Haunting

Eeek! It’s time for the Drug Channels Halloween roundup of terrifying tales from the dark corners of the healthcare system. Gather your favorite demon hunters and help maintain the Honmoon. This month’s tricks and treats include:

• Vampiric! How vertically integrated insurers can drain the lifeblood from the U.S. healthcare system

• Boo! Chilling stories of the shady alternate funding programs that haunt patients

• Creepy! Why the Part D market is headed for an early grave

• Grotesque! The monstrous expansion of 340B

Plus: Dr. Glaucomflecken returns from the underworld to summon the ACIP séance.

P.S. Join the ever-growing zombie horde that lurches after me and enjoy haunting commentary from the restless spirits of the DCI community.

Express Scripts’ new “rebate-free pharmacy benefit” model materialized too late for this month’s roundup. But I ain’t afraid of no rebates, so I’ll be bustin’ it soon on Drug Channels.