The Great Unbundling of PBMs: A Regulatory-Driven Sector Re-rating and the Rise of Transparent Alternatives

The pharmacy benefit manager (PBM) sector is undergoing a seismic shift driven by regulatory scrutiny, fiduciary compliance demands, and technological innovation. Over the past two years, a confluence of federal and state-level reforms has forced a re-rating of the sector, with legacy PBM giants like CVS Health, Cigna, and UnitedHealth Group facing existential challenges. At the same time, a new generation of fiduciary-compliant and tech-enabled PBMs is emerging, offering a compelling alternative for employers and investors alike. This transformation-what I term the "Great Unbundling"-reflects a broader realignment of incentives in healthcare, where transparency and accountability are no longer optional but imperative.

Regulatory Overhaul: From Oversight to Litigation

The Federal Trade Commission (FTC) has taken a hardline stance against PBMs, filing lawsuits against industry leaders for alleged anticompetitive practices, including spread pricing and rebate manipulation. These suits, coupled with the introduction of the PBM Reform Act (H.R. 4317) in 2025, signal a regulatory pivot from passive oversight to active market restructuring. The Act proposes banning spread pricing in Medicaid, mandating 100% rebate pass-through to plan sponsors, and decoupling PBM compensation from drug prices in Medicare Part D. Such measures directly target the opaque revenue models of legacy PBMs, which have long profited from hidden spreads and retained rebates.

State-level reforms have further accelerated this trend. California now requires PBMs to act as fiduciaries, prioritizing payer interests over their own, while Arkansas has banned PBM ownership of pharmacies-a practice critics argue creates inherent conflicts of interest. Ohio's Medicaid program, which uncovered $224 million in overcharges due to spread pricing, has transitioned to a pass-through model with full pricing transparency. These state-level experiments are not isolated but part of a coordinated effort to dismantle the financial opacity that has defined the PBM sector for decades.

The Rise of Fiduciary-Compliant Alternatives

As regulators and employers demand greater accountability, a new breed of PBMs is capturing market share. US-Rx Care, the first fiduciary-compliant PBM, has emerged as a flagship example. By eliminating pharmacy ownership and passing through 100% of rebates and discounts, it aligns its interests with employers and patients. Employers using this model have reported cost reductions of 30–50% within a year, alongside improved medication adherence and clinical outcomes.

The shift is not merely ethical but economic. A 2025 Mercer report found that 61% of employers with 500+ employees are actively seeking alternatives to traditional PBM contracts, driven by rising pharmacy benefit costs (up 8% in 2024) and the legal risks of ERISA fiduciary breaches. These employers are increasingly favoring models that offer real-time cost visibility, such as Ohio's Medicaid pass-through system, which has reduced administrative complexity and improved price competition.

Technology as a Disruptive Force

Technological innovation is amplifying the appeal of these new PBMs. AI-driven analytics are being deployed to predict medication nonadherence, detect fraud, and optimize formulary design. OptumRx, for instance, uses machine learning to personalize interventions for patients at risk of discontinuing treatment. Surescripts, meanwhile, provides real-time cost and coverage insights, empowering members to make informed decisions. These tools not only enhance operational efficiency but also align with the sector's broader pivot toward patient-centric care.

Strategic Reallocation: From Legacy Giants to Transparent Innovators

For investors, the implications are clear. Legacy PBM models, which rely on opaque revenue streams and vertical integration, are increasingly vulnerable to regulatory and reputational risks. In contrast, emerging PBMs that prioritize transparency, fiduciary compliance, and technological agility are well-positioned to capture market share. The PBM Reform Act and state-level fiduciary mandates will likely force traditional players to either adapt or exit the market, creating opportunities for agile competitors.

Moreover, the legal landscape is shifting. ERISA litigation against self-funded employers for fiduciary breaches has surged, with PBMs facing claims over rebate retention and spread pricing. Employers are now prioritizing partners that can demonstrate compliance with these standards, further tilting the playing field toward fiduciary-compliant models.

Conclusion: A Sector Reimagined

The Great Unbundling of PBMs is not a temporary trend but a structural reconfiguration of the healthcare ecosystem. Regulatory pressures, employer demands, and technological advancements are converging to create a market where transparency and accountability are non-negotiable. For investors, this represents a pivotal moment: a chance to reallocate capital from legacy models under siege to innovative PBMs that are redefining the industry. As the sector evolves, those who embrace this shift will find themselves at the forefront of a more equitable and efficient healthcare system.