Pharmacy Carve Outs Gain Ground as Employers Seek More Control Over Drug Costs
A Shift Toward Transparency
Pharmacy costs continue to rise in 2026, driven by specialty medications, GLP 1 utilization, and new gene therapy treatments. Many employers are discovering that their medical carriers’ pharmacy programs offer limited transparency and few levers for cost control. As a result, pharmacy carve outs—where employers contract directly with a PBM—are gaining traction.
Carve outs give employers more visibility into pricing, rebates, and utilization patterns. They also allow for customized formularies and tighter specialty drug management. For employers facing unpredictable pharmacy trend, the appeal is clear: more control, more data, and more flexibility.
Why Employers Are Making the Move
Specialty drugs now account for more than half of total pharmacy costs for many employers. Traditional carrier contracts often bundle medical and pharmacy pricing, making it difficult to isolate the true cost drivers. Carve outs separate the two, allowing employers to negotiate directly with PBMs and evaluate performance more precisely.
Employers that have made the switch report clearer reporting, better rebate structures, and more flexible plan design. Some also note improved alignment between pharmacy strategy and broader health plan goals, especially when managing chronic conditions or high cost claimants.
The Tradeoffs
Carve outs are not a universal solution. They require stronger vendor management and can introduce administrative complexity. Some employers worry about member disruption, especially if formularies change or prior authorization rules tighten. Others are cautious about the learning curve involved in managing a standalone PBM relationship.
Still, carve outs are becoming a central part of 2027 planning. Brokers play a key role in helping clients evaluate options, compare pricing models, and assess operational impacts. For employers with rising specialty drug spend, carve outs may offer the clearest path to regaining control.
Preparing for 2027
Benefits managers considering a carve out should begin with a review of current pharmacy trend, specialty drug utilization, and rebate performance. Understanding the baseline makes it easier to evaluate whether a carve out will deliver meaningful savings. It also helps identify where current programs are falling short—whether in pricing, formulary management, or member experience.
Timely care prevents escalation. And when employees feel supported, retention improves. Employers also report fewer manager escalations and improved employee engagement scores—an often overlooked but important benefit.
What Employers Should Do Now
Benefits managers planning 2027 renewals should begin by auditing current access times and reviewing carrier reports. Understanding how long employees wait for care is the first step in determining whether a new strategy is needed.
Key steps include:
- Analyzing specialty drug claims to identify high cost categories and recurring utilization patterns.
- Reviewing rebate guarantees and pass through arrangements to determine whether current contracts are delivering full value.
- Assessing member experience to understand how access, prior authorization, and communication affect satisfaction and outcomes.
For many employers, pharmacy carve outs are becoming a practical way to regain control over one of the fastest growing components of healthcare spend. As 2027 planning accelerates, carve outs offer a strategic opportunity to improve transparency, stabilize budgets, and build a more sustainable long term pharmacy strategy.
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