A new industry assessment finds that nearly all life sciences executives believe gross-to-net (GTN) revenue management has become more complex, with many reexamining government program participation and increasing investments in automation and artificial intelligence (AI).

The findings, released in the 2026 State of Revenue Report^1,2 commissioned by Model N and conducted by Dimensional Research, were conducted for the eighth consecutive year.

They’re based on responses from 429 US-based director-level and higher leaders in pharmaceutical and medtech companies with annual revenue exceeding $250 million. While the data reflect sponsor-commissioned research, trends cited in the report align with broader market analyses and federal policy developments.

“... Optimizing GTN in recent years has become increasingly more difficult,” the report states, with 99% of surveyed leaders indicating that managing rebates, discounts, chargebacks, and government program obligations has grown more challenging.

What is driving the growth of the gross-to-net bubble and increasing drug pricing pressures?

Survey respondents reported near-universal agreement that GTN processes have grown more complicated in recent years. The report references external analysis estimating that the pharmaceutical “gross-to-net bubble” reached $356 billion in 2024, although growth slowed compared with prior years.³

Independent industry research has documented the widening gap between list and net prices in the US pharmaceutical market, driven largely by commercial rebates and fees paid to pharmacy benefit managers (PBMs) and government-mandated discounts.³ The role of PBMs in formulary design and rebate negotiations has been widely examined in federal policy discussions and Federal Trade Commission inquiries.⁴

In the Model N survey, 61% of respondents cited increasing PBM demands as a top contributor to GTN complexity, followed by expansion of government pricing programs and proliferation of patient assistance programs.

These pressures coincide with ongoing implementation of pricing reforms under the Inflation Reduction Act (IRA), including Medicare drug price negotiation. Under the IRA, additional therapies are slated for negotiation and will take effect Jan. 1, 2027.

Nearly half of survey respondents (49%) expressed concern that the Medicare negotiation component of the IRA could negatively affect their businesses. The survey also found that 37% of companies have seriously considered withdrawing from Medicaid participation, though only a minority reported concrete steps toward withdrawal. Medicaid participation is tied to other federal program eligibility, including Medicare Part B and participation in the 340B Drug Pricing Program.

How are life sciences companies managing compliance risk and preparing for government pricing audits?

The survey suggests that compliance concerns are intensifying. More than half (53%) of respondents said their organizations have become more risk averse over the past five years.

Although 94% of survey respondents expressed confidence that their government pricing reports could withstand an audit, smaller firms reported lower levels of full confidence compared with companies generating more than $5 billion in annual revenue.

Automation appears widespread but incomplete. Most respondents indicated that compliance reporting for government programs and commercial contracts is “mostly automated,” though manual processes persist, particularly among globally operating firms.

How is AI transforming gross-to-net management, and where do data gaps remain?

The survey also reports rapid uptake of AI tools in revenue management. Ninety-seven percent of respondents said they currently use AI in some capacity, with projected adoption approaching 99.5% within two years.

“This year’s State of Revenue Report reveals that the life sciences industry is at a pivotal moment,” noted the commissioners of the report. “Regulatory volatility, the expanding influence of pharmacy benefit managers, and the ever-accelerating pace of technological innovation have created unprecedented complexity. However, all is not lost; opportunities abound to optimize revenue, ensure compliance, and drive sustainable growth. The revenue leaders who embrace data integration, automation, and AI will be best positioned for success in 2026 and beyond.”

References

1. 2026 State of Revneue Report. Model N. Published February 11, 2026. https://www.modeln.com/state-of-revenue-report-2026/

2. Survey: 99% of Life Sciences Leaders Say Gross to Net Has Become More Complex. GlobeNewswire. Published February 10, 2026. Accessed February 17, 2026. https://www.globenewswire.com/news-release/2026/02/10/3235349/0/en/Survey-99-of-Life-Sciences-Leaders-Say-Gross-to-Net-Has-Become-More-Complex.html

3. Fein AJ. Gross-to-net bubble hits $356B in 2024—But growth slows to 10-year low. Drug Channels. Published July 15, 2025. Accessed February 17, 2026. https://www.drugchannels.net/2025/07/gross-to-net-bubble-hits-356b-in.html

4. Federal Trade Commission. FTC launches inquiry into the business practices of pharmacy benefit managers. Published June 7, 2022. Accessed February 17, 2026. https://www.ftc.gov/news-events/news/press-releases/2022/06/ftc-launches-inquiry-prescription-drug-middlemen-industry