How Well Intended Pharmacy Benefit Design Can Do Real Harm

I recently saw a post on LinkedIn that stuck with me. It described several individuals with diabetes enrolled in an employer-sponsored pharmacy benefit who had stopped checking their blood sugars. Not because they didn’t understand the importance, but because the test strips cost roughly $150 per month and they hadn’t yet met their deductible.

Predictably, their conditions worsened. Eventually, each progressed to insulin-dependent diabetes, a far more complex and expensive condition to manage than the cost of the testing supplies they initially went without.

This is a textbook example of how cost barriers can turn into clinical problems, and how those clinical problems ultimately become far more expensive for everyone involved. In this case, the underlying driver wasn’t a lack of education or engagement, it was plan design. Specifically, a high-deductible health plan requiring members to shoulder significant upfront costs before coverage meaningfully kicked in.

High-deductible plans are often positioned as a way to lower premiums, promote consumerism, and discourage unnecessary utilization. In theory, they encourage people to shop for value.

In practice, they often do something very different. They push people to delay or skip necessary care, particularly medications and monitoring tools, until their health deteriorates. When that happens, costs don’t disappear, they simply show up later, in a more severe and expensive form.

That example got me thinking about other, less obvious ways plan sponsors may be undermining their own goals while trying to manage pharmacy spend.

Below are three common dynamics I see, and what can be done differently.

1. Worsening Health Inequities Without Realizing It

I’ve written before about how the rebate-driven PBM model inflates drug list prices. What’s discussed far less is who actually bears the burden of those inflated prices.

Member cost-sharing is almost always calculated off the list price of a medication, not the net price after rebates. Meanwhile, rebates are collected long after the prescription is filled and flow back to the plan sponsor, where they’re typically used to offset overall plan costs or reduce premiums across the entire population.

The result? Members who rely on medications the most, often those with chronic or complex conditions, pay the highest out-of-pocket costs. They’re effectively subsidizing rebates that benefit the broader population.

Sicker members use more medications, and more expensive medications, meaning they contribute disproportionately to rebate accumulation while receiving none of the point-of-sale relief. For some, that translates into skipped doses, abandoned prescriptions, or delayed therapy.

What can you do instead?

Shift the focus away from maximizing rebates and toward securing the lowest possible net cost. Where feasible, reduce or eliminate cost-sharing on essential medications. Yes, pharmacy spend may rise in the short term, but preventing disease progression, hospitalizations, and downstream complications almost always delivers a better long-term return.

2. Restricting Access to Clinical Pharmacy Support

Medication mismanagement is incredibly expensive. Incorrect dosing, poor adherence, adverse effects, and inappropriate therapy selection quietly drive avoidable medical costs year after year.

Clinical pharmacy services, such as comprehensive medication management and pharmacogenomic testing, are proven tools to address these issues. Yet access to them is often limited by the structure of the employer pharmacy benefit itself.

The largest PBMs control most of the market and are deeply vertically integrated. They don’t just manage the benefit; they also own retail pharmacies, specialty pharmacies, and mail-order operations. That creates strong incentives to steer members toward PBM-owned channels, sometimes at the expense of access, choice, or care quality.

Members may be required to use a specific mail-order pharmacy, pay more to use an independent pharmacy, or lose access to pharmacists who know their history and can provide ongoing medication management. In rural or underserved areas, these restrictions can be particularly harmful.

In some cases, PBMs may also discourage or financially penalize plan sponsors for adopting services like pharmacogenomics, even when those services could prevent trial-and-error prescribing or serious adverse events.

A better approach is to carve out clinical pharmacy services from the PBM entirely. By working with independent vendors whose incentives align with optimizing outcomes rather than dispensing volume, plan sponsors can expand access to services that improve medication use and reduce total cost of care.

3. Promoting Higher-Cost Drugs With Less Value

The rebate model also distorts formulary design. Drugs with high list prices and large rebates are often favored over lower-cost alternatives that may be just as effective.

This creates a system where formulary placement is influenced by financial arrangements rather than clinical evidence. Higher-priced drugs receive preferred status, while generics or biosimilars may be restricted, excluded, or buried behind utilization barriers.

For plan sponsors and members, that means higher costs without corresponding improvements in outcomes.

To counter this, push for formulary decisions grounded in evidence and total cost, not rebate potential. Require transparency into how drugs are evaluated and why they’re placed where they are. When newer, more expensive therapies are added, ask for data demonstrating meaningful clinical advantage over existing options.

Some plan sponsors go a step further by carving out formulary management altogether, partnering with independent clinical organizations that have no financial stake in drug pricing.

The Bottom Line

Employer-sponsored pharmacy benefits are filled with misaligned incentives. Many of them are baked into the system and easy to overlook, but that doesn’t make their consequences any less real.

Left unaddressed, these dynamics can lead to financial strain for members, widening health disparities, and poorer outcomes, all while driving higher long-term costs for the plan.

The first step toward a more member-centric pharmacy benefit is recognizing where well-intentioned structures are working against the very people they’re meant to support. From there, plan sponsors can take deliberate, measurable steps to redesign benefits that prioritize access, value, and health.

Done thoughtfully and consistently, pharmacy benefits can become a tool that supports better care, rather than an obstacle members have to navigate around.