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Provider-administered drugs are one of the fastest-growing and least-managed cost drivers for commercial plan sponsors.
Despite that, recent data from the Pharmaceutical Strategies Group show that only 35% of commercial plan sponsors currently have a site of care (SOC) program in place for specialty pharmacy. That result is surprising given the size of the savings at stake.
Medicare has figured this out and started site-neutral payments over a decade ago, but the employers who fund the bulk of commercial health spending largely haven't.
The evidence supporting SOC management is no longer the story. The real question is why so many commercial plans continue paying hospital prices when lower-cost alternatives already exist.
Whether you support or oppose the current structure of 340B, it is becoming harder to ignore that the debate is expanding beyond manufacturers and hospitals. Employers, health plans, and policymakers are beginning to ask who ultimately finances the program—and what those economics mean for benefit costs and premiums.
For years, Medicare Part D plans often preferred high-list/high-rebate branded multiple sclerosis (MS) drugs over lower-cost generics. That was rational behavior inside an irrational system.
The Inflation Reduction Act (IRA) offers one example of how incentives can change behavior in the system. New research in JAMA Health Forum reveals a significant reversal in Medicare Part D formulary coverage for MS drugs. After years of plans favoring brand-name drugs over generics, 2025 formularies shifted to near-universal generic coverage.
However, in return patients got narrower formularies, higher upfront costs, and way more taxpayer dollars spent than expected.
While this wasn’t the case for all drug classes, in MS, the IRA Part D redesign has forced plans to care more about net drug spending. Below, we analyze the formulary data and explain why the coverage patterns changed so abruptly—and what new tradeoffs have emerged.
Summer unofficially kicked off last weekend. So fire up the grill and enjoy these noteworthy delicacies, seared to perfection on the Drug Channels barbeque:
Don't miss DCI’s upcoming webinar on Friday, June 12, 2026, from 12:00 p.m. to 1:30 p.m. ET. Adam J. Fein and Tyler Novotny will unpack the good, the bad, and the ugly of the 340B program—and what it means for you. Click here to learn more and sign up.
Earlier today, the Federal Trade Commission (FTC) announced an extraordinary settlement with Express Scripts that fundamentally reshapes its pharmacy benefit management (PBM) business—and by extension, the entire drug channel.
The settlement addresses virtually every warped incentive that we have been covering on Drug Channels for the past 20 years. I summarize them below, but it’s worth reading the full document (links below) to appreciate just how completely the FTC has dismantled the existing PBM business model.
One small caveat: Plan sponsors could provide a loophole for business-as-usual. (See Section XI.)
William Gibson once said: “The future is already here–it's just not evenly distributed.” That future just arrived for one of the biggest PBMs. Get ready.
For 2026, the three largest pharmacy benefit managers (PBMs)—Caremark (CVS Health), Express Scripts (Cigna), and Optum Rx (United Health Group)—have once again excluded hundreds of drugs from their standard formularies. Our updated counts appear below.
The 2026 lists highlight how formulary preferences for Humira and Stelara are dominated by private-label biosimilars affiliated with the same parent companies that operate the three largest PBMs. Many of the preferred products feature lower list prices, signaling growing tension between traditional rebate-driven formularies and emerging net-price-based competition.
These developments matter because the pricing system that underpins PBMs’ formulary leverage is weakening. The gross-to-net bubble is deflating and the industry is moving toward what we call the Net Pricing Drug Channel (NPDC).
As low list prices, direct-to-patient distribution, and cost-plus reimbursement models gain traction, formulary exclusions will no longer deliver the economic power they once did. These changes threaten PBMs’ leverage—and profits.
As usual, Mark Cuban is leading the way. AbbVie itself now appears to be following. Consider this year’s formulary review a preview of what market access looks like when the rebate game starts to unwind.
Don't forget to register for DCI’s next webinar on Friday, April 10, 2026, from 12:00 p.m. to 1:30 p.m. ET. Adam J. Fein and Bryce Platt will unpack the good, the bad, and the ugly of the PBM industry—and explore what it means for you. Click here to learn more and sign up.
Special launch pricing discounts will be valid through April 6, 2026.
This report—our seventeenth edition—remains the most comprehensive, fact-based tool for understanding the entire U.S. drug pricing, reimbursement, and dispensing system. If you make strategic decisions in this industry, this report is essential reading.
WHAT’S INSIDE
Nearly 1,300 endnotes, most of which have hyperlinks to source materials
If you preordered, you should have received an email with download instructions last week. Didn’t get it? Contact us at dcisupport@hmpglobal.com, and we’ll take care of it.
Our goal is simple: help you understand how the drug channel really works—and where it’s going.
That's why DCI reports are widely used by nearly every company involved in the drug channel:
Pharmaceutical manufacturers
Wholesalers, pharmacists, and pharmacy owners
Payers, insurers, and plan sponsors
Hospitals, benefit managers, and managed care executives
Policy analysts, investors, consultants, and more
In other words, this report helps you understand what your customers, partners, and competitors are reading—and how they’re thinking.
The chart below illustrates the depth and breadth of the 2026 edition. The numbers indicate the report chapter that corresponds to, explains, and analyzes each channel flow.
FUN FACTS ABOUT THE 2026 EDITION
The 12 chapters are self-contained—you don't need to read them in order. (Really!) Use the report as a reference guide or read it end-to-end. It’s designed as both a foundational resource and a deep dive into the latest trends and developments.
There are tons of internal hyperlinks to help you navigate and focus on what matters most to you.
We’ve updated all market and industry data with the most current insights, including our annual analyses of the largest pharmacies, specialty pharmacies, and PBMs.
One of the available licenses gives you the option to download an additional PowerPoint file with images of all 270 exhibits—making it easier to share insights with your team. (Note: All license versions include exhibits within the text.)
There are a staggering 1,284 endnotes (!), most of which have direct hyperlinks to original source materials. This allows you to validate, explore, and go deeper.
We have reluctantly removed all corny jokes and pop culture references. So, no memes and absolutely no references to SpongeBob SquarePants.
Thank you for your interest in our work. If you have any questions before purchasing a license to the report, please email me. We look forward to helping you succeed in the evolving U.S. drug channel.
On March 24, 2026, Drug Channels Institute will release The 2026 Economic Report on U.S. Pharmacies and Pharmacy Benefit Managers. This report—our seventeenth edition—remains the most comprehensive, fact-based tool for understanding the entire U.S. drug pricing, reimbursement, and dispensing system. If you make strategic decisions in this industry, this report belongs on your desk.
12 chapters, 500+ pages, 270 exhibits, and nearly 1,300 endnotes. No other resource matches the scope, depth, and rigor of this resource.
We are offering you the opportunity to preorder the thoroughly updated, revised, and expanded 2026 edition at special discounted prices. Preordering guarantees early access and locks in the lowest available price. Those who preorder will receive a download link before March 30.
Special preorder and launch pricing discounts will be valid through April 6, 2026. After that date, prices increase. Secure your discount now.
The report was researched and written by the Drug Channels Institute team, led by Adam J. Fein, Ph.D. As shown below, the 2026 edition delivers unmatched depth and breadth. The numbers indicate the report chapter that corresponds to, explains, and analyzes each channel flow.
The 2026 Economic Report on U.S. Pharmacies and Pharmacy Benefit Managers contains the most current market and industry data available, including DCI’s annual analyses of the market positions of the largest pharmacies, specialty pharmacies, and PBMs. Throughout the report, we have added new industry data, deepened our coverage of many topics, and expanded our analysis of emerging trends.
This definitive, nonpartisan report will aid pharmaceutical manufacturers, wholesalers, pharmacists, pharmacy owners, hospital executives, pharmacy buyers, benefit managers, managed care executives, policy analysts, investors, consultants, and anyone else who wants to understand and benefit from this ever-changing industry. If your organization competes, negotiates, invests, or sets policy in this market, this report will sharpen your strategy.
There are many notable updates in this 2026 edition, including:
A new Section 4.3.4. analyzes manufacturers’ direct-to-patient (DTP) websites and TrumpRx within the broader context of patient-paid prescriptions.
A new Section 5.5. deconstructs the three largest PBMs’ gross profits. Some of this material previously appeared in Chapter 11.
Material in Section 7.1., Section 9.1., and Section 9.3. reflects the PBM legislative reforms contained within the Consolidated Appropriations Act, 2026 (P.L. 119-75), which became law in February 2026.
Material in Section 8.4. and Section 9.3. incorporates implications of the 2026 settlement between Express Scripts and the Federal Trade Commission.
A new Section 6.3.3. reviews research on how the IRA’s implementation has affected out-of-pocket spending by Medicare Part D beneficiaries.
A new Section 11.2.4. analyzes pharmacies’ dispensing profits under the Inflation Reduction Act of 2022 (IRA).
A new Section 12.1.4. evaluates the potential implications of most favored nation (MFN) and tariff policies on the drug channel.
In Section 12.3.1., our illustration of major vertical business relationships among drug channel businesses now incorporates affiliated third-party administrators (TPAs) and administrative services only (ASO) platforms.
We have also improved our presentation of material about the IRA and the 340B Drug Pricing Program.
Thank you for your interest in our work. If you have any questions before purchasing a license to the report, please email me. We look forward to supporting your team’s success in 2026.
Despite the recent storm, winter—or at least February—is almost over. Before we thaw out, here’s a brisk tour of the forces reshaping the drug channel. In this issue:
Valentine’s Day is almost here! It’s the perfect time for our annual update on plan sponsors’ enduring sweetheart: copay accumulators and maximizers—the benefit designs that divert manufacturers’ copay support away from patients and toward plans and PBMs.
As of late 2025, about four in ten commercially insured lives were enrolled in plans using a copay accumulator or a maximizer. Patients who rely on single-source, brand-name specialty drugs for autoimmune conditions, multiple sclerosis, and oncology are increasingly likely to encounter these designs. The data below illustrate how widespread these programs have become—and where their impact is most acute.
The potent combination of payer savings and PBM profits continues to attract plan sponsors, while patients remain caught in the middle of a complex and often opaque struggle among insurers, PBMs, and drugmakers. While a growing number of states have acted to restrict these tools, the states' reach remains limited.
Copay accumulators and maximizers exemplify many of the worst features of our crazy drug channel and add troubling complexity to benefit designs that already feature multiple tiers, copayments, coinsurance, deductibles, exclusions, and more. In this Valentine’s story, patients are still not the ones being courted.
Earlier today, the Federal Trade Commission (FTC) announced an extraordinary settlement with Express Scripts that fundamentally reshapes its pharmacy benefit management (PBM) business—and by extension, the entire drug channel.
The settlement addresses virtually every warped incentive that we have been covering on Drug Channels for the past 20 years. I summarize them below, but it’s worth reading the full document (links below) to appreciate just how completely the FTC has dismantled the existing PBM business model.
One small caveat: Plan sponsors could provide a loophole for business-as-usual. (See Section XI.)
William Gibson once said: “The future is already here–it's just not evenly distributed.” That future just arrived for one of the biggest PBMs. Get ready.
For 2026, the three largest pharmacy benefit managers (PBMs)—Caremark (CVS Health), Express Scripts (Cigna), and Optum Rx (United Health Group)—have once again excluded hundreds of drugs from their standard formularies. Our updated counts appear below.
The 2026 lists highlight how formulary preferences for Humira and Stelara are dominated by private-label biosimilars affiliated with the same parent companies that operate the three largest PBMs. Many of the preferred products feature lower list prices, signaling growing tension between traditional rebate-driven formularies and emerging net-price-based competition.
These developments matter because the pricing system that underpins PBMs’ formulary leverage is weakening. The gross-to-net bubble is deflating and the industry is moving toward what we call the Net Pricing Drug Channel (NPDC).
As low list prices, direct-to-patient distribution, and cost-plus reimbursement models gain traction, formulary exclusions will no longer deliver the economic power they once did. These changes threaten PBMs’ leverage—and profits.
As usual, Mark Cuban is leading the way. AbbVie itself now appears to be following. Consider this year’s formulary review a preview of what market access looks like when the rebate game starts to unwind.
As always, thank you for welcoming Drug Channels into your inboxes, browsers, and apps. I’m continually inspired by the diverse and thoughtful people who follow, share, and challenge our work. Our DCI community now includes more than 110,000 subscribers and followers across the industry. If you haven't already done so, you can stay connected by signing up for an email subscription or following me on LinkedIn.
We loved bringing you our analysis and curated links throughout 2025, and we hope you enjoyed engaging with us—and with one another—across the DCI community.
Stay tuned! In addition to our second Drug Channels Leadership Forum, we have several exciting announcements coming your way in 2026.
Wishing you and your family health and happiness,
Adam and the DCI team
This week, I’m rerunning some popular posts while I prepare for today’s live video webinar: Drug Channels outlook 2026. I'll be discussing why and how the gross-to-net bubble will be deflating.
Is the gross-to-net bubble—the ever-widening gap between brand-name drug sales at list prices and their net revenues after rebates and discounts—finally beginning to deflate?
Drug Channels Institute (DCI) estimates that the gross-to-net reductions for all brand-name drugs reached $356 billion in 2024, a 7% increase over the previous year. Yet despite this record total, the bubble expanded at the slowest rate in at least a decade.
In our analysis below, we highlight five key forces driving this shift. Among them: manufacturers’ evolving market access strategies, which increasingly aim to offset—or circumvent—growing pricing pressure from both commercial and government payers.
Meanwhile, many patients remain adrift in the drug channel’s murky waters. As for SpongeBob SquarePants—the longtime mascot of the gross-to-net bubble here at Drug Channels—he’s still with us…but may be eyeing the exit.
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.
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.
The 2025 launch of biosimilars to Johnson & Johnson’s Stelara (ustekinumab) marks another turning point in pharmacy benefit dynamics. But unlike the chaotic rollout of Humira biosimilars, pharmacy benefit managers (PBMs) came prepared.
Private label strategies, aggressive pricing, and exclusive formulary deals have transformed what might have been a slow-crawling biosimilar introduction into a full-on pricing war. As with Humira, the reality of biosimilar economics is far messier—and more revealing—than the policy narratives suggest.
In this post, I examine how the major PBMs—and some of the smaller ones—are handling Stelara biosimilars, what’s changed since the Humira experience, and why their strategies reflect the growing dominance of private-label rebating schemes.
As always, with great pricing power comes great responsibility. Excelsior!
Is the gross-to-net bubble—the ever-widening gap between brand-name drug sales at list prices and their net revenues after rebates and discounts—finally beginning to deflate?
Drug Channels Institute (DCI) estimates that the gross-to-net reductions for all brand-name drugs reached $356 billion in 2024, a 7% increase over the previous year. Yet despite this record total, the bubble expanded at the slowest rate in at least a decade.
In our analysis below, we highlight five key forces driving this shift. Among them: manufacturers’ evolving market access strategies, which increasingly aim to offset—or circumvent—growing pricing pressure from both commercial and government payers.
Meanwhile, many patients remain adrift in the drug channel’s murky waters. As for SpongeBob SquarePants—the longtime mascot of the gross-to-net bubble here at Drug Channels—he’s still with us…but may be eyeing the exit.
By 
This week, I’m rerunning some popular posts while I prepare for today’s live video webinar: 
This week, I’m rerunning some popular posts while I put the finishing touches on DCI’s 