February 26, 2026
Big Pharma, PBM Reform & Why Your Health Insurance Premiums Keep Skyrocketing
Recently, an article from Healthcare Brew highlighted new proposed reforms around Pharmacy Benefit Managers (PBMs) and drug pricing transparency. Let me break this down in simple terms for business owners.
What’s Actually Happening?
In many cases, a drug costs under $100 to manufacture, yet it gets marked up and billed to insurance plans at $1,000 per month (or more). That markup doesn’t just affect “big insurance companies.” It directly impacts employer-sponsored health plans, small businesses, employees paying payroll deductions, and individuals and families with high deductibles.
And when these inflated drug prices hit the claims side of a health plan, guess what happens next? Premiums increase.
Why Are We Seeing 20%-40% Premium Increases?
As a PEO and health insurance broker, I’m seeing renewals across the country jump 20%, 30%, even 40%. One of the biggest drivers? Specialty drugs and pharmacy costs. When a single prescription costs $1,000+ per month — even if it costs a fraction of that to produce — it dramatically inflates total claims. Higher claims = higher renewal rates. It’s math.
What Are PBMs and Why Do They Matter?
PBMs (Pharmacy Benefit Managers) sit in the middle between drug manufacturers, insurance carriers, and patients. They negotiate pricing and manage formularies. The issue? Many PBM contracts lack transparency. Rebates, spread pricing, and hidden markups make it extremely difficult to see what a drug actually costs, who is making money, and whether the pricing is justified.
Why This Matters to You as a CEO
If you offer health insurance, you are directly affected. When drug prices are artificially inflated, your renewal increases, your employees pay more per paycheck, your company absorbs higher employer contributions, and your long-term budgeting becomes unpredictable.
This is exactly why I encourage proactive planning: alternative funding strategies, pharmacy carve-outs, transparent PBM arrangements, smart plan design, and reviewing level-funded or PEO structures. You cannot control Congress. But you CAN control your health plan strategy.
My Take
Overcharging $1,000 for a drug that costs under $100 to produce is not sustainable. Transparency is long overdue. This legislation is a step in the right direction for employers, employees, and families across the country.
If you’re frustrated with rising renewals or want to understand what’s driving your increases, let’s have a conversation. You deserve transparency.
Suzanna Martinez, President | PEO For The CEO