Beyond Rebates: Payers Ditch Discounts for Control as Drug Costs Soar

DALLAS, TX – April 27, 2026 – Healthcare payers are signaling a dramatic shift in strategy, moving to abandon long-standing, rebate-driven models in a bid to gain control over skyrocketing specialty drug costs. A new report reveals a growing willingness among employers and health plans to sacrifice lucrative discounts in favor of stronger management tools, a move that challenges the fundamental business model of pharmacy benefit managers (PBMs) and signals a new era in the battle over prescription drug affordability.

According to the 2026 Trends in Specialty Drug Benefits Report released by Pharmaceutical Strategies Group (PSG), an EPIC company, managing the total cost of care remains the top priority for payers. However, the methods for achieving that goal are undergoing a radical transformation. The report, based on a survey of 228 benefits leaders, found that developing coverage strategies for new, complex drugs and their expanded uses has now become the single greatest challenge, eclipsing even member affordability and data integration concerns.

“Payers continue to prioritize managing specialty drug trend and total cost of care,” said Morgan Lee, Vice President of Research and Marketing at PSG, in a statement accompanying the report. “At the same time, they are working to develop effective coverage strategies for new drugs and expanded indications, take a more integrated approach across pharmacy and medical benefits, and reassess traditional arrangements, including their reliance on rebates.”

The End of the Rebate Era?

For years, large rebates paid by manufacturers to PBMs have been a cornerstone of drug benefit negotiations. The PSG report, however, indicates a significant pivot. A striking two in five organizations now state they are willing to accept fewer rebates in exchange for the power to implement more stringent utilization management controls. This finding suggests a growing recognition that the short-term financial gain from rebates may be outweighed by the long-term costs of using expensive, heavily rebated drugs when more cost-effective alternatives exist.

This shift is fueled by increasing skepticism about the alignment of interests between payers and their PBMs, particularly when a PBM also owns the specialty pharmacy dispensing the high-cost medications. The report surfaces payer concerns about this vertical integration, questioning whether such arrangements truly serve the payer's best interest in controlling costs. This sentiment echoes broader market trends and intense regulatory scrutiny. Federal actions, including the PBM Price Transparency and Accountability Act and heightened investigations by the Federal Trade Commission, are forcing greater transparency and pushing the industry toward “pass-through” models where all discounts are passed directly to the plan sponsor.

Further complicating the rebate picture is the disparity between benefits. While 93% of payers receive rebates for drugs covered under the pharmacy benefit, only 51% get them for drugs administered under the medical benefit—a gap that disproportionately disadvantages employers compared to health plans. This structural challenge is pushing payers to seek more holistic management strategies.

The Cell and Gene Therapy Conundrum

Nowhere is the pressure more acute than with the advent of cell and gene therapies (CGTs). These revolutionary treatments, which can offer cures for previously intractable diseases, come with staggering price tags, sometimes reaching millions of dollars per patient. The report highlights CGTs as a primary source of financial anxiety, with 85% of health plans and 71% of employers expecting them to create moderate or major financial challenges in the coming years.

“Many organizations lack confidence in their ability to project future costs and fully understand the financial impact, making it difficult to plan for these therapies effectively,” noted Renee Rayburg, Vice President of Clinical Strategy at PSG.

Despite this widespread concern, payers are struggling to respond. The report reveals a startling gap between recognized risk and proactive mitigation. Only 27% of health plans and a mere 5% of employers have entered into CGT-specific risk-sharing financial programs with manufacturers. This low adoption rate suggests that payers lack the tools, confidence, or visibility to effectively forecast therapy uptake and negotiate outcomes-based contracts for these groundbreaking but budget-breaking treatments.

With a robust pipeline of over 4,000 CGTs in development and an estimated 10 to 12 new approvals expected annually, this forecasting challenge is set to intensify, threatening to destabilize healthcare budgets without new, innovative payment and risk-management solutions.

A New Playbook for Payer Strategy

In response to these mounting pressures, payers are building a new strategic playbook focused on integration and granular data analysis. The report finds that 72% of payers now have a medical drug formulary in place, and 68% are actively working to optimize their specialty drug formulary across both the pharmacy and medical benefits. This reflects a move away from siloed management and toward a unified approach that considers the total cost of a patient's care, regardless of how a drug is administered.

This integrated strategy is being powered by a deeper dive into data. Nearly half of all respondents (46%) are now prioritizing member-level total cost of care evaluations. This shift from broad, population-level analysis to a more granular, patient-centric view allows payers to better understand cost drivers and design more effective, targeted interventions.

“Today’s payers are at a critical juncture, balancing the promise of new therapies with mounting cost pressures,” said Rebekah Gregg, Chief Operations Officer at PSG. The report underscores that the old methods are no longer sufficient. As payers increasingly prioritize long-term control over short-term rebates and grapple with the financial realities of next-generation medicine, the entire healthcare landscape—from PBMs to pharmaceutical manufacturers—is being forced to adapt to this new reality.