Healthcare costs continue to climb in 2026, and many small businesses are struggling to keep pace. Mercer recently projected that employer health benefit costs will rise 6.5% this year, the steepest increase in more than a decade. Without plan design changes or cost reduction measures, that increase would approach 9%. At the same time, prescription drug prices continue to rise, driven largely by specialty medications and a pharmaceutical supply chain that most employers cannot fully see or evaluate.
For many small business owners, the frustration is no longer just about rising costs. It is about paying more every year while having less visibility into where healthcare dollars are actually going. The growing pushback against traditional pharmacy benefit manager models reflects a broader concern that the system has become too opaque, too complicated, and too disconnected from the interests of employers and employees alike.
The Hidden Economics Behind Rising Drug Costs
For decades, pharmacy benefit managers, commonly known as PBMs, have operated as intermediaries between drug manufacturers, insurers, pharmacies, and employers. In theory, their role is to negotiate lower costs and simplify access to medications. In practice, many employers now question whether the current structure creates incentives that reward higher spending rather than lower net costs.
The Federal Trade Commission (FTC) has increasingly scrutinized the PBM market, particularly after decades of consolidation left the three largest PBMs controlling over 80% of prescriptions filled in the U.S. Those organizations are also vertically integrated into other parts of the healthcare supply chain, including insurance companies, specialty pharmacies, and rebate administration entities. As a result, many employers feel they are funding a system they cannot fully audit or understand.
The problem becomes especially difficult for small and midsize businesses that lack the internal resources to dissect complex pharmacy contracts or challenge opaque pricing arrangements. When employers receive annual renewal increases, they are often told the rise is simply the unavoidable cost of healthcare inflation. Yet many plan sponsors still cannot clearly determine how much of their spending is tied to actual drug acquisition costs versus rebates, spread pricing, administrative fees, or specialty pharmacy markups.
That lack of transparency creates a major strategic problem. Business owners cannot effectively forecast costs or make informed benefits decisions when the underlying pricing structure is hidden behind layers of confidential contracting. Healthcare becomes less of a manageable operating expense and more of an unpredictable financial liability.
Specialty Drugs Are Changing the Math for Small Employers
The pressure on employer-sponsored healthcare plans is increasingly concentrated in specialty pharmacy. These medications, often used to treat cancer, autoimmune disorders, genetic diseases, and other complex conditions, now account for a disproportionate share of total drug spending despite serving a relatively small percentage of patients.
Even one employee requiring a high-cost specialty therapy can materially affect a small employer’s annual healthcare budget. That level of concentration changes how employers think about risk. Historically, most businesses expected healthcare costs to rise gradually over time. Today, a single catastrophic claim can dramatically reshape renewal negotiations and future contribution strategies.
At the same time, specialty medications often face the strictest utilization management controls in the healthcare system. Prior authorization requirements, restricted pharmacy networks, and step therapy protocols have become common tools used to manage spending. While these controls are intended to contain costs, they also create administrative friction that directly affects employees seeking treatment.
This disconnect creates growing tension for employers. Businesses are paying more for benefits, while employees often experience longer delays, more paperwork, and greater confusion when navigating coverage. The result is an environment in which employers increasingly question whether the current system delivers value proportional to its cost.
Small Businesses Are Losing Trust in the Traditional Model
Recent surveys show that more than 90% of employers believe rebate-free pharmacy benefit models would improve transparency and make drug pricing easier to understand. That reflects a broader shift in how employers are evaluating their healthcare partnerships.
Many business owners are beginning to ask a more direct question: if costs continue to rise every year but the pricing structure remains hidden, how can employers accurately determine whether the system is actually working on their behalf?
The challenge is especially significant for small businesses because healthcare costs affect far more than benefits budgets alone. Rising premiums influence hiring decisions, wage growth, retention strategies, and long-term business planning. According to the National Federation of Independent Business, the cost of health insurance remains the number one problem facing small business owners, a position it has held for decades.
That reality forces difficult tradeoffs. Some employers reduce benefit richness, increase deductibles, or shift more costs onto employees simply to maintain affordability. Others consider dropping coverage altogether. Neither option solves the underlying structural issue. It simply transfers financial pressure downstream to workers and families.
At the same time, employees are feeling the effects directly. Nearly three in ten Americans report rationing or skipping prescribed medications because of cost. When employees cannot consistently access or afford medications, the consequences extend beyond healthcare spending. Productivity, absenteeism, morale, and workforce stability are all affected.
Employers Are Beginning To Explore Different Models
As frustration with opaque PBM structures grows, more employers are exploring alternatives that prioritize transparency and accountability over rebate complexity.
One of the clearest shifts is growing interest in pass-through pricing arrangements. Under these models, employers gain greater visibility into actual drug acquisition costs and can better understand how vendors are compensated. Rather than relying on spread pricing or hidden rebate structures, pass-through models aim to align incentives more directly between employers, patients, and healthcare partners.
Transparency matters because predictability matters. Small businesses can manage rising costs more effectively when they understand where expenses originate and how pricing decisions are made. Clearer visibility allows employers to evaluate tradeoffs more strategically rather than reacting to annual renewal increases without meaningful context.
Some organizations are also evaluating direct contracting arrangements and procurement strategies for high-cost medications. Others are separating specialty pharmacy oversight from traditional insurance structures to reduce concentration risk and gain more control over procurement decisions.
These approaches are not simply about lowering costs. They are about rebuilding trust in a healthcare system where many employers feel disconnected from the financial decisions shaping their plans. Employers increasingly want healthcare partners whose incentives are transparent, measurable, and aligned with long-term workforce health rather than short-term transactional revenue.
Transparency Is Becoming a Competitive Advantage
The future of employer-sponsored healthcare will likely belong to organizations that can create clearer alignment between cost, value, and patient outcomes. That does not necessarily mean healthcare costs will stop rising overnight. Specialty innovation will continue to expand, and breakthrough therapies will continue to enter the market.
However, employers are becoming less willing to accept opaque pricing structures as an unavoidable part of doing business. Small businesses, in particular, cannot sustain indefinite increases in healthcare costs without greater accountability from the organizations that manage pharmacy benefits behind the scenes.
This shift is larger than a debate over PBMs alone. It reflects a broader demand for transparency across the healthcare supply chain. Employers increasingly expect the same visibility, auditability, and accountability from healthcare vendors that they demand from every other strategic business partner.
In 2026, the businesses best positioned to manage healthcare costs will be the ones building benefits strategies around transparency, aligned incentives, and a clearer understanding of where their healthcare dollars actually go.
Paul Pruitt is the Co-founder and Chief Growth Officer of SHARx and a key driver of the company’s rapid expansion. With experience across operations, finance, and benefits consulting, he began his career as COO and CFO at a boutique employee benefits firm and later specialized in self-funded health plans for a bank-owned agency.
Paul’s mission is shaped by personal experience: two of his children were diagnosed with a rare orphan disease, giving him a dual perspective as an industry expert and parent navigating high-cost therapies. This fuels his commitment to fair prescription pricing and high-touch member support.
