Employers are evaluating alternatives to traditional PBM contracts 

One of the interesting findings in Mercer’s soon-to-be-released Survey on Health & Benefit Strategies for 2026 was the volume of employers that are actively evaluating new approaches for offering or managing their pharmacy benefits — 61% of those with 500 or more employees. What’s driving all this activity? The backdrop, of course, is continued rapid growth in spending on pharmacy benefits — cost rose by 8% in 2024, driving up overall health benefit cost growth. Beyond cost, however, are concerns about fiduciary risk and a historical lack of transparency in traditional PBM contracts. The lack of price information also presents barriers for plan sponsors seeking to play an active role in managing pharmacy benefit costs. 

A market in flux

The three largest PBMs are responding to competitive market forces by offering different contracting models, and 40% of employers say they are exploring these new options. It’s still too early to determine whether real change in the market will come from the major PBMs, but employers are willing to consider what’s being offered.

Despite the largest PBMs’ market dominance, new PBMs are jumping into the market, and employers are expressing interest in exploring these new options. Some new vendors differentiate themselves by saying they offer greater transparency and better-aligned incentives. However, it's important to note many sub-contract a range of services from the major PBMs.

_{* Employers with 500 or more employees}

_{* Mercer Survey on Health & Benefit Strategies for 2026}

Zeroing in on transparency

About a third of respondents (34%) are evaluating the benefits of requiring their PBM to disclose all enterprise revenue. This can be of value in that PBM reporting on revenue, including their owned assets (such as retail, mail, and specialty pharmacies as well as GPOs), does increase transparency in a meaningful way, helping employers to understand how much they pay the PBM for their services and which levers to use to manage costs.

Taking a modular approach — contracting with separate entities for various pharmacy benefit management services — is still a trailblazing strategy, with just 10% of respondents evaluating it. Because these various contracts transition to be held by the employer, not the PBM, they improve plan sponsor autonomy and agility, with the trade-off being increased complexity for both the plan and the member.

A mandate for action

Although we were surprised by the large number of employers exploring PBM alternatives, perhaps what’s actually more surprising is that any survey respondents are not considering a change in how they manage their pharmacy benefits. While other concerns may take priority in any one year, given how dynamic the pharmacy landscape is right now, it’s important not to go too long before refocusing on this critical area.