Executive Brief – How To Flip The Procurement Script
Most PBM procurements get the sequence backwards: pick the PBM, then fight over the contract. That’s a recipe for weak leverage, hidden fees, and fiduciary risk.
As Tyrone Squires CEO of TransparentRx advises: “Put the PBM contract at the front of the competitive bidding process—and keep it there.”
That’s exactly what the Nautilus PBM Configurator does. It flips the process:
Contract Compliance RFI for incumbents → can legacy PBMs meet fiduciary-grade standards?
Market Test RFI for passthrough PBMs → prove alignment with transparency and fiduciary duty.
The result? A side-by-side comparison exposing resistance vs. readiness.
Why It Matters
Contracts aren’t paperwork—they’re governance. They decide whether:
Fiduciaries meet loyalty and prudence.
Plan assets are protected or siphoned.
Savings are real or illusory.
Starting with the contract keeps leverage where it belongs: with fiduciaries.
Clauses That Count
Go to the Nautilus PBM Project site where you’ll find 28 model contract clauses that define fiduciary-grade PBM contracting:
Financial – pass-through pricing, rebate transparency, audit rights
Each clause includes a fiduciary rationale, drafting tips, and model language you can adopt.
Tale of Two RFIs
The Next Phase: Validation and Differentiation
The goal is industry-wide adoption so fiduciary-grade contracts become the default. Our roadmap:
Convene 5 transparent PBMs.
Prioritize the highest-impact terms.
Standardize widely supported provisions.
Expand to the next 5 adopters and more provisions.
Build momentum cohort by cohort, provision by provision.
This approach creates a bright line: legacy PBMs resist, passthrough PBMs embrace validation of their transparency claims. Differentiation then shifts to clinical outcomes, member experience, and innovation.
What’s In It For Employers
Flip the process: lead with the contract, then choose the PBM. Use the PBM Configurator and model contract clauses to secure fiduciary-grade terms as your default—and then focus on what you value most: outcomes.
What’s In It For PBMs
Separate yourself from those who resist: Adopt the model clauses and win business by proving transparency is baseline—and competing on value.
Case Study: The AIA Example
Building construction once faced the same problem: endless redlined contracts. The American Institute of Architects (AIA) created standardized agreements that became the industry default. That shift raised the bar, saved time and money, and let firms compete on design and execution—not contract games.
The PBM industry is at the same inflection point. Standardized fiduciary-grade contracts can do the same.
Key Takeaways
The conventional PBM RFP process is flawed.
The Nautilus PBM Configurator flips the process: contract first.
Transparent PBMs win by adopting fiduciary standards.
Employers gain leverage, transparency, and compliance.
Once contracts are baseline, PBM competition shifts to outcomes.
Bottom line: Contracts aren’t a battleground. They’re the baseline. Employers can enforce it today. PBMs can lead it tomorrow.
Learn More & Explore
Thanks to Paul Holmes, Partner at Williams Barber Morel for his contribution to the Nautilus PBM Project. Paul is a seasoned ERISA lawyer with nearly 40 years of specialization in that field. Paul has extensive and unique experience in representing large employers and Taft-Hartley welfare funds in their selection, contracting, auditing and litigation with large PBMs.
Explore the model PBM contract language and apply for early access to the Nautilus PBM Configurator at: 🔗 nautilushealth.org/pbm
💸 SPECIAL OFFER: Newsletter subscribers receive 10% off any Validation Institute service. Use code FIDUCIARY10 at checkout.
validationinstitute.com
📬 PAY IT FORWARD: Feel free to forward this offer to your broker, PBM, or other vendors. Don’t hesitate to tell them you will favor validated vendors as part of your modernized procurement processes. Strong compliance and better benefits begin with validation.
Don’t be a bystander. Change the status quo and reap the benefits of The Health Plan Compliance Advantage.
