How disclosure laws really impact drug prices

As U.S. politicians turn to transparency as a fix-all for rising drug costs, research by Ginger Scanlon (PhD ’25) is a reminder that shining a light on the system can sometimes make things more tangled, not less.

She studied how disclosure laws for pharmacy benefit managers (PBMs) affect drug prices for her PhD dissertation at UNC Kenan-Flagler Business School.

PBMs are the middlemen in the drug supply chain. They negotiate prices between drugmakers, insurers and pharmacies, and help decide which drugs are covered and how much patients pay.

Scanlon’s findings arrive as President Donald Trump thrusts PBMs into the spotlight.

In April, he signed an executive order to cut prescription drug prices by enhancing government pricing negotiations and increasing discounts to low-income patients.

The order also addresses the role of PBMs in the drug market, pushing for more openness around how they operate.

But as Scanlon makes clear, the promise of transparency in this corner of the healthcare system is often a double-edged sword.

“We tend to turn to transparency as a catch-all solution,” she says. “But it turns out this is a setting where both secrecy and disclosure have their place. That’s the unsatisfying reality.”

How disclosure laws really impact drug prices

Scanlon’s study takes a close look at how PBM disclosure laws really impact drug prices. She breaks it down into two main types of rules.

First, there’s inter-firm disclosure, where PBMs share price information with insurers and drugmakers. Then there’s regulatory disclosure, where they hand over data to government watchdogs.

The results of her study are striking.

Inter-firm disclosure helped patients pay about 1% less at the pharmacy counter, but it came at a cost to insurers, who faced a 3.5% average increase in spending across all drug types.

The effect was even more pronounced for competitive drugs — where price wars usually help keep costs down — with insurer spending rising by 4.4% as manufacturers pulled back on discounts.

The likely reason? When drugmakers know their discount deals will be visible to competitors, they’re less willing to offer steep price cuts — blunting the competitive pressure that normally helps keep prices down.

“I was honestly surprised by that,” Scanlon says. “The U.S. healthcare market has so many players and moving parts, I thought any effect from transparency rules would get lost. But in the end, it lines up with what theory tells us about how information advantages work.”

Her research suggests that if every state had used inter-firm disclosure in 2021, drug spending would have jumped by $11 billion — driven largely by higher prices.

“Drugmakers don’t want to be the only ones giving steep discounts,” Scanlon says. “When their competitors can see what they’re offering, they pull back. So ironically, transparency can suppress competition.”

On the other hand, Scanlon found that regulatory disclosure — where PBMs report to state officials — doesn’t make much of a dent in prices.

But in places where regulators are more hands-on, prices drop a bit.

“Disclosure only works if regulators have the resources to act on it,” says Scanlon. “It’s not enough to collect data — there has to be enforcement behind it.”

When regulators don’t have the tools or backing to act, the rules just add extra costs for PBMs — costs that often get passed on to patients.

Scanlon found that in states with these laws, family insurance deductibles were around $200 higher, rising from an average of $3,237 to over $3,400 – meaning patients still end up paying more in the end.

Timely findings

With Trump’s order putting drug prices and transparency in the spotlight, Scanlon’s findings land at just the right moment.

Her advice to lawmakers is clear: Don’t just aim wide — aim smart.

“Monopoly drugs with no direct substitute are a good place to focus, because that’s where PBMs have the most pricing power,” says Scanlon. She found that patients pay about 9% less for monopoly drugs with PBM transparency, suggesting that’s an area where PBMs use their informational advantage for their own benefit.

She also warns that any reform will have a shelf life.

“What works now might not work in a couple of years. PBMs are rational, profit-maximizing firms. They will adapt.”

Scanlon’s interest in PBMs was born from her time in the pharmaceutical industry, where she witnessed firsthand the opaque inner workings of drug pricing.

“Increasingly, fingers were pointing at PBMs,” she recalls. “I wanted to know — are they part of the problem or part of the solution?”

The answer, as her research suggests, is both. PBMs can use their inside knowledge to cut prices — or to drive them up. It all depends on who’s paying attention and how the market is set up.

For now, Scanlon’s watching closely to see how the rules around PBMs continue to take shape, but her research sends a clear warning to policymakers: There’s no quick fix for drug prices. Transparency might sound good on paper, but it has trade-offs.

Her point isn’t that disclosure is wrong — it’s that it’s messy. And in healthcare, messy is normal.

“We’re in a market where some secrecy can serve the public good, and some openness can do harm,” she says. “That’s the hard part. But it’s also the reality.”

Scanlon’s dissertation, “Prescription for Savings? Disclosure in the Drug Market,” was recognized by the American Accounting Association (AAA) with the 2025 AAA Competitive Manuscript Award. She completed her PhD in May and joins the UNC Kenan-Flagler faculty in July.