Washington, D.C., November 14, 2025– In a new report released today by The ERISA Industry Committee (ERIC), a majority of member companies stated they would consider shifting away from the “Traditional Rebate Model” if they were able to achieve savings by including lower list price drugs like biosimilars on their formulary. The report, “Innovative Employer Models: Incorporating Biosimilars into Health Plan Drug Formularies,” identifies biosimilars as a tool for employers to reduce their spending on prescription drugs while maintaining access to high-quality, clinically equivalent treatments for their employees, and highlights several major employers that have taken proactive, innovative approaches to driving value in their pharmacy benefits.
“With drug prices outpacing inflation, employers are constantly searching for ways to bring affordable drugs to workers and their families. Biosimilars have proven repeatedly that they can be an affordable alternative – but only if access is a reality,” said Melissa Bartlett, ERIC’s Senior Vice President of Health Policy. “Employers are fed up with being told that the affordable and effective biosimilar options they are seeking are not an option. And they are increasingly responding by moving away from the “old guard” model and crafting solutions that are more affordable and responsive to the needs – and pocketbooks – of their workforce.”
Pharmacy Benefit Managers (PBMs) generally rely on a “Traditional Rebate Model” where PBMs receive rebate payments and fees from drug companies in exchange for placing a manufacturer’s drug on a formulary. Despite data demonstrating that biosimilars can save employers billions of dollars, employers continue to face challenges to including biosimilars. Since lower-cost drugs like biosimilars generate less revenue for PBMs under the traditional model, many PBMs have been resistant to including biosimilars on formularies. This slows biosimilar adoption, undercuts competition, and limits savings for employer-plan sponsors and patients.
In addition to citing a desire to shift away from the “Traditional Rebate Model,” the vast majority of ERIC member companies also reported that they would consider abandoning their reliance on rebates if plan expenditures for the year would be lower without rebate guarantees. While about half of ERIC’s members are actively making efforts to analyze whether making such a change is appropriate, others are successfully lowering their health care spending by adopting innovative strategies to encourage biosimilar utilization through formulary tiering, direct contracts, multivendor models, and data-driven decision making. ERIC’s new report highlights several companies adopting these innovative approaches, including:
Amazon employs a data-centric strategy for healthcare decision-making that prioritizes cost reduction and evidence-based outcomes, though it doesn’t necessarily eliminate pharmacy benefit administrators entirely.
Amazon’s integrated teams—comprising data analytics, pharmaceutical benefits, and health benefits specialists — dive deep into transparent claims data and pharmacy benefit performance metrics. This continuous data evaluation enables Amazon to glean valuable insights into net drug pricing – the “real” price after rebates and fees are factored in. Amazon translates these insights into lower costs for members and the plan through emerging contractual innovations with pharmacy benefit administrators, and other entities supporting pharmacy benefits, including formulary management, rebate administration, and mail order and specialty pharmacy.
Blue Shield of California (“Blue Shield”) has taken steps to eliminate their reliance on the traditional model with one of the three major PBMs operating today, and instead, has chosen to contract with multiple vendors to perform many of the same services a PBM would provide, but at a significantly lower cost, and in a much more transparent and equitable way. Through this multi-vendor partnership, Blue Shield works with specified companies to:
- Negotiate the prices of the prescription drugs covered under Blue Shield’s plan.
- Disclose the prices of covered prescription drugs to participants through a mobile app.
- Deliver prescription drugs directly to participants.
- Process claims and other payments for covered prescription drugs.
An unnamed company adopted a direct contracting model with retail pharmacies, effectively bypassing PBMs entirely. In doing so, the company took steps to deconstruct the prescription drug supply chain to identify:
- Where in the supply chain costs for prescription drugs are the most economical.
- Where in the chain the prices of the drugs are inflated.
In 2020, ERIC launched a groundbreaking initiative to better understand the role that biosimilars could play in reducing health care costs. Through this work, ERIC found that biosimilars saved employers, employees, and their families millions, with the potential for much greater savings. ERIC’s advocacy also served to support and drive federal efforts to lower prescription drug and biosimilar costs by eliminating barriers and reducing gamesmanship, helping cheaper, effective biosimilars reach the market sooner.
Access the full report here.