In 2025, federal scrutiny of Pharmacy Benefit Managers (PBMs) has reached a level not seen before. What was once tolerated as opaque and self-serving practices is now the subject of a coordinated push by Congress, regulators, and the executive branch. For independent pharmacies and plan sponsors alike, this moment represents both risk and opportunity. The actions taken over the coming months and years will shape the way prescription drug benefits are administered, how costs are managed, and how accountability is enforced.
The Expanding Oversight Landscape
The House Oversight and Accountability Committee (the Committee) recently escalated its investigation into PBMs by demanding records related to PBM-owned rebate aggregation entities based overseas. These aggregators, some of which are structured in Switzerland and Ireland, have become central to the way PBMs negotiate and retain rebates from drug manufacturers. Lawmakers are raising questions about whether these offshore structures were designed to avoid U.S. scrutiny, limit transparency, and allow PBMs to keep a larger share of rebates that should otherwise benefit health plans and patients.
The investigation builds upon years of concern that PBMs use rebate arrangements not as a tool to reduce costs but as a means to maximize profits at the expense of plan sponsors, pharmacies, and patients. What makes this investigation different is its scope and intensity. The Committee's interest in offshore rebate aggregators signals a recognition that these entities are not merely administrative conveniences. They are structural tools designed to capture revenue, complicate audits, and limit oversight.
At the same time, the Federal Trade Commission (FTC) has broadened its own enforcement actions, focusing on the very same rebate aggregators and their impact on drug pricing. The FTC has launched both a comprehensive Section 6(b) study and a pending administrative lawsuit centered on insulin rebate contracts. These actions, taken together with congressional inquiries, demonstrate a coordinated federal push to unwind PBM practices that have distorted the prescription drug market for decades.
Executive Orders and Federal Pressure
The current administration has gone even further by issuing an Executive Order (the Order) earlier this year that directly targeted PBM practices. The Order called for eliminating spread pricing in federal contracts, requiring greater transparency of all PBM fees, and separating PBM operations from affiliated pharmacies in federal program networks. Taken as a whole, these directives strike at the heart of PBM vertical integration. For years, PBMs have expanded their reach by acquiring specialty pharmacies, building affiliated mail-order operations, and controlling rebate flows through offshore aggregators. Federal policy is now openly questioning whether these arrangements serve any purpose other than to enrich PBMs at the expense of others in the healthcare system.
The Department of Labor is also preparing new guidance that will clarify plan sponsors' fiduciary obligations under ERISA as they relate to pharmacy benefits. This guidance will emphasize the responsibility of fiduciaries to scrutinize PBM compensation, rebate pass-through, and contract structures. Combined with the FTC's enforcement activity, plan sponsors will no longer be able to simply take PBM reports at face value. They will be expected to show diligence in reviewing contracts and rebate flows and to demonstrate prudence in how they oversee the administration of their plans.
The Mechanics of Rebate Aggregators
Rebate aggregators are not a natural evolution of drug purchasing. They are manufactured corporate entities, often set up offshore, designed to pool rebate contracts and concentrate leverage. On paper, their role is to negotiate better rebate terms with manufacturers by consolidating the volume of multiple PBMs. In practice, they allow PBMs to capture and retain rebates in ways that make it difficult for plan sponsors or regulators to determine the true flow of funds.
Instead of passing the rebate directly to the plan sponsor, the rebate flows into the rebate aggregator. From there, fees, service charges, or "administrative costs" may be deducted before the remainder is shared. In many cases, the plan sponsor is never told the total amount of the original rebate. The PBM's reporting only shows what is ultimately passed through. Without clear audit rights or transparency provisions, plan sponsors have no way of knowing how much money was retained along the way.
This structure has far-reaching consequences. Manufacturers may raise list prices to offset the hidden rebates, driving costs higher for everyone. Independent pharmacies may be squeezed as PBMs shift formulary design to favor drugs with higher rebates rather than those that are clinically optimal or lower in cost. Patients may find themselves paying higher out-of-pocket costs because co-pays are often tied to inflated list prices, not the net price after rebates.
Fiduciary Duties for Plan Sponsors
Plan sponsors must remember that they are fiduciaries under ERISA, meaning they are legally obligated to act prudently and solely in the interest of plan participants. That obligation extends to the management of prescription drug benefits. Sponsors cannot ignore the rebate aggregator issue simply because the arrangements are complex or hidden. Courts and regulators have made clear that fiduciaries are expected to ask hard questions, review contracts, and demand transparency.
If a plan sponsor continues to contract with a PBM that refuses to disclose rebate flows or hides behind offshore aggregator structures, the sponsor risks breaching its fiduciary duty. That can lead to lawsuits, regulatory enforcement, and significant financial liability. In an environment where the FTC, the Department of Labor, and Congress are all scrutinizing these practices, sponsors must show that they are not asleep at the wheel. They must demonstrate that they are actively protecting their participants from overpayment and hidden costs.
What Pharmacies Need to Know
Independent and community pharmacies have long borne the brunt of PBM practices. Spread pricing, below-cost reimbursements, and audit abuse have become standard operating procedures. The rise of rebate aggregators has added another layer of distortion. When PBMs design formularies based on rebate maximization rather than clinical appropriateness, pharmacies are forced to navigate networks that disadvantage them and their patients.
The good news is that the current wave of oversight may finally provide a measure of relief. By forcing transparency into rebate arrangements, regulators may curtail the ability of PBMs to steer patients exclusively to their own affiliated pharmacies. By requiring disclosure of how rebates influence formulary placement, policymakers may empower independent pharmacies to challenge unfair reimbursement structures. But none of this will happen automatically. Pharmacies must be prepared to assert their rights, challenge unjust audits, and demand fair treatment under the law.
Moving Forward with Integrity and Accountability
There is a traditional principle at stake here. For decades, the pharmacy profession and the employer community have operated on the belief that fairness, transparency, and accountability are non-negotiable values. PBMs have, in many ways, eroded those values by constructing systems that prioritize opacity and profit. The current moment represents an opportunity to restore balance. Oversight bodies are finally aligned with the principles that pharmacies and sponsors have been advocating for years.
Practical Steps for Stakeholders
For plan sponsors, the first step is to initiate or strengthen audit processes focused specifically on rebate flows and administrative fees. Do not accept vague summaries or high-level reports. Demand detailed documentation that allows you to trace every rebate dollar from the manufacturer to the plan. Review contract structures to ensure that audit rights are enforceable and that fee arrangements are clearly defined.
Pharmacies must take a parallel approach by carefully documenting audit disputes, reimbursement inconsistencies, and evidence of patient steering. The ability to present a well-documented record can make all the difference in regulatory or legal challenges. Pharmacies should also educate patients and local legislators about how PBM practices drive costs higher, building alliances that can support reform.
Both groups must be proactive rather than reactive. Waiting for regulators to solve these problems will leave you vulnerable. The best protection is preparation—contract review, benchmarking, and legal positioning that put you ahead of the curve.
How We Can Help
Buchanan's Pharmacy Group focuses on helping pharmacies and plan sponsors navigate exactly these issues. For plan sponsors, that means reviewing contracts, analyzing rebate flows, and developing audit strategies that uncover hidden costs and protect fiduciary integrity. For pharmacies, that means challenging PBM audits, defending against unjust network terminations, and ensuring compliance while fighting back against unfair practices.
We bring not only a legal background but also a pharmacy foundation. That combination allows us to understand the real-world impact of these practices on both the financial and clinical sides of healthcare. We have worked with independent pharmacies, national employers, and self-funded plans, giving us a broad perspective on how PBMs operate across the industry.
A Call to Action
This is a critical moment. Federal agencies and Congress are shining a spotlight on PBM rebate practices, but it is up to stakeholders to use that light to their advantage. Plan sponsors must protect their participants by demanding transparency and accountability. Pharmacies must safeguard their patients and businesses by resisting unfair practices.
The system has long favored secrecy, but the tide is turning. Those who prepare and act decisively will come out stronger, while those who ignore the warning signs will face greater risks. The time to demand fairness is here. Together, we can ensure that traditional values of accountability, honesty, and patient care are not only preserved but strengthened in the years ahead.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
