Beyond Borders, Beneath the Surface
Staff Writer

A quiet revolution is unfolding in the pharmacy benefits world, and it’s not happening in boardrooms or benefit conferences. It’s happening across borders. As drug prices in the United States continue to soar, pharmacy benefit managers (PBMs) are looking outward, sourcing medications from international markets to reduce spend and expand access. What began as a fringe strategy has now become a serious lever in plan design. Beneath the promise of savings lies a complex terrain of tiers, trade-offs, and transparency challenges.
International drug sourcing is no longer a theoretical concept. It’s a growing reality in the benefits ecosystem, driven by the stark price differentials between U.S. medications and their global counterparts. Brand-name drugs in the U.S. routinely cost two to three times more than in peer countries. This disparity is not just frustrating, it’s unsustainable. Employers are increasingly asking: If the same medication is available abroad for a fraction of the cost, why are we paying more here? What would it take to access that value without compromising safety or care? The answer lies in a new kind of pharmacy strategy, one that blends global sourcing with domestic oversight, and one that challenges the traditional PBM model at its core.
How International Sourcing Took Hold
The roots of international drug sourcing trace back to a simple economic truth: U.S. drug prices are among the highest in the world. Unlike many developed nations, the United States lacks centralized price negotiation. In countries like Canada, the United Kingdom, and across the European Union (EU), national health systems negotiate directly with manufacturers to set prices. These negotiations are backed by government leverage and population-scale purchasing power. In contrast, the U.S. relies on fragmented negotiations led by PBMs, insurers, and employers, each with limited bargaining strength and opaque rebate structures.
As the cost burden grew heavier, self-funded employers began exploring alternatives. Some turned to pharmaceutical tourism, where patients traveled abroad to purchase medications directly. Others partnered with vendors who could source drugs from licensed international pharmacies and ship them to members. Over time, this ad hoc approach evolved into a more structured strategy, with PBMs and carve-out vendors offering international sourcing as part of their service mix. Today, international sourcing is a formalized option in many self-funded plans. It’s no longer a workaround…it’s a design choice.
How It Works: The Mechanics of Global Access
At its core, international drug sourcing involves purchasing medications from licensed pharmacies outside the United States. These medications are typically identical or clinically equivalent to their U.S. counterparts, and they are shipped directly to members through vetted channels. The sourcing process is governed by strict regulatory standards, with vendors prioritizing countries that maintain high levels of pharmaceutical oversight.
The most common sourcing countries include Canada, the United Kingdom, and select EU nations. These regions are favored for their strong safety protocols, transparent pricing, and reliable supply chains. Medications sourced from these countries often come with full documentation, batch tracking, and quality assurance measures that mirror or exceed U.S. standards.
To manage risk and ensure compliance, PBMs and vendors often tier their sourcing countries. Tier 1 countries, such as Canada and the UK are considered the gold standard, offering the highest regulatory alignment and the lowest clinical risk. Tier 2 countries may offer deeper discounts but come with more variability in packaging, naming conventions, and clinical equivalence. Tier 3 countries are typically avoided due to concerns around counterfeiting, inconsistent oversight, or supply chain instability.
This tiering system allows employers to balance savings with safety. It also underscores the importance of working with partners who understand the nuances of global sourcing and can navigate the complexities with precision.
The Savings Story: What Employers Are Seeing
The financial appeal of international sourcing is undeniable. Employers can save up to 10 percent on total pharmacy spend by sourcing select medications abroad. For high-cost brand-name drugs, the savings can be even more dramatic. Discounts of 40 to 85 percent off U.S. list prices are not uncommon. These savings are especially compelling for drugs with minimal or no rebate value where traditional PBM strategies offer little relief.
The greatest impact is often seen in specialty or maintenance medications that members take regularly. These drugs represent a significant portion of pharmacy spend, and sourcing them internationally can yield long-term savings without disrupting care. Employers also benefit from predictable pricing, reduced volatility, and greater control over formulary design. However, the savings story is not without caveats. As international sourcing volumes increase, some vendors have begun raising prices to manage demand. Supply shortages in source countries have prompted governments to reconsider export policies, raising questions about long-term sustainability. Employers must remain vigilant, ensuring that their sourcing strategies are not only cost-effective but also resilient and ethically sound.
The Hidden Trade-Offs: Rebates, Regulation, and Risk
While international sourcing offers upfront savings, it can also disrupt the rebate ecosystem. Rebates have long been a cornerstone of PBM economics, serving as a key negotiating tool with manufacturers. When employers bypass domestic distribution channels, they may forfeit rebate opportunities, especially for drugs with high rebate value. This trade-off must be carefully evaluated. There are also clinical considerations. Medications sourced from abroad may have different names, packaging, or dosage strengths. This can create confusion for patients and providers, especially when transitioning between domestic and international fills. Employers must invest in member education, provider coordination, and clinical oversight to ensure safe and effective use. Regulatory compliance is another critical factor. U.S. distribution requirements mandate serial numbers, barcoding, and tracking of all prescription drugs from manufacturer to pharmacy. These protections reduce the risk of counterfeit drugs but also raise packaging and logistics costs. International sourcing must meet or exceed these standards to maintain safety and trust. At Acumen, we help employers navigate these trade-offs with clarity. We believe that international sourcing is not a shortcut, it’s a strategic lever that must be pulled with intention.
Why This Matters Now: The Urgency of Reform
The rise of international sourcing is not just a trend, it’s a symptom of dysfunction in the U.S. pharmacy benefits system. It reveals the limitations of rebate-driven models, the opacity of traditional PBM contracts, and the misalignment between cost and care. Employers are no longer willing to accept these limitations. They are demanding transparency, modularity, and clinical engagement. They are rethinking their PBM relationships, exploring carve-outs, and designing pharmacy strategies that reflect their values. International sourcing is part of that movement, but it’s not the whole story. The real opportunity lies in reform. In building benefits ecosystems that prioritize outcomes over rebates, clarity over complexity, and care over commerce. In treating pharmacy strategy as infrastructure, not just administration. In elevating pharmacists, activating data, and designing networks that reward performance.
What Employers Should Do Next
If you’re considering international sourcing, start with a strategic map. Identify the drugs that offer the greatest savings potential. Evaluate your current PBM contract for rebate exposure. Vet sourcing partners based on regulatory alignment, supply chain stability, and member experience. Design communication flows that support safe transitions and informed choices. Most importantly, lead with clarity. Don’t chase discounts, build ecosystems. Don’t outsource strategy, own it. Don’t wait for reform, become it. At Acumen, we’re ready to walk with you. To help you navigate the new global terrain, design with intention, and activate a pharmacy benefits strategy that reflects who you are and what you believe. Let’s talk about what international sourcing could mean for your plan and how to make it a movement, not just a mechanism.