The Big 6 PBMs—CVS Health, Express Scripts, OptumRx, Humana Pharmacy Solutions, MedImpact, and Prime Therapeutics—control 94% of the market, often using opaque pricing models and misaligned incentives.
Beyond this market concentration, an even more worrisome trend is the increasing integration of PBMs with health insurers. This vertical integration reduces competition, increases market power, and limits transparency in cost control and profit distribution. It also raises ethical concerns over potential conflicts of interest, as PBM-insurer relationships enable insurers to circumvent Medical Loss Ratio (MLR) requirements.
Source: Data Channel Institute
Employers Need Disciplined Procurement
As Matt Ohrt, author of Save Your Company likes to say, “Don’t Feed The Beast.” You must find viable vendor alternatives aligned with your interests.
Fortunately, 60+ smaller PBMs (see list below) are vying to be your alternative. All want your business, but not all will deliver promised savings—or be around for the long term. Employers must take a disciplined procurement approach to separate sustainable innovation from empty marketing claims.
PBM problems are real, but the solution isn’t hiring a full-time Chief Pharmacy Officer as some suggest—it’s disciplined procurement, contracting, and vendor oversight.
What Employers Should Do Instead
✅ Establish Benchmarks & Define Success
Speak with peer organizations known for strong benefits management to understand what good looks like. Review benchmark data on PBM pricing models, cost savings strategies, and contract structures.
✅ Perform Rigorous Due Diligence
Conduct site visits, reference checks, and contract reviews to ensure vendors can actually perform. Engage independent benefits consultants or fiduciary experts to validate contract terms and pricing structures.
✅ Leverage Independent Pharmacy Experts
Many companies specialize in formulary guidance, comparative effectiveness research, and alternative approaches to expensive drug therapies (especially for cancer, autoimmune conditions, and specialty medications). Engaging these independent clinical and financial experts can help ensure high-cost therapies are used appropriately and cost-effectively.
✅ Start with an RFI
Before an RFP Issue a Request for Information (RFI) to your existing PBM and a shortlist of alternatives. Require vendors to incorporate specific legal language into any future contracts to prevent loopholes and hidden fees.
✅ Demand True Cost Transparency—Not Rebate Games
Focus on lowest cost across all drugs, rather than rebates, aggregate discounts, or percent off AWP pricing schemes that mask true costs. Push for pass-through pricing models where employers pay the actual acquisition cost plus a fixed, disclosed admin fee.
✅ Carve Out Specialty & Rethink Generics
Specialty drugs can account for 50%+ of pharmacy spend—explore alternative sourcing models or carve-outs for better cost control. Consider transparent pharmacy models for generic drugs to bypass traditional PBM markups.
Key Takeaways
A Chief Pharmacy Officer Won’t Solve PBM Abuses—Stronger Procurement Will. Employers don’t need another executive—they need better vendor oversight, stronger contracts, and disciplined cost management.
Benchmarks & Peer Comparisons Are Essential. Before choosing a PBM, understand what top-performing employers are doing and define clear success metrics.
Rebates & Discounts Don’t Equal Savings—Net Cost Matters. PBMs often structure deals around rebates and aggregate discounts, which don’t always result in the lowest cost. Focus on total net cost per drug.
Independent Pharmacy Experts Can Help. Companies specializing in formulary management, comparative drug effectiveness, and alternative treatment strategies can help employers make smarter, more cost-effective decisions.
RFI + Legal Guardrails Can Set the Right Foundation. By starting with an RFI that includes key legal provisions upfront, employers can avoid getting locked into bad contracts.
Specialty Drugs & Generics Require Special Strategies. Carve-outs, direct contracts, and alternative sourcing models can deliver significant savings beyond traditional PBM structures.
Employers who control PBM contracts strengthen compliance, cut costs, and improve outcomes.
BONUS: Use the following list of 60+ PBMs And PBM-Adjacent Tech & Services Companies as a starting point to develop your short list:
Abarca Health, AcariaHealth, Advanced Medical Pricing Solutions, AffirmedRx, Alluma, ALTTRAX, American Health Care, AscellaHealth, BeneCard PBF, Capital Rx, Carelon, CerpassRx, Choice Rx Solutions, Citizens Rx, ClearScript, Costco Health Solutions, Crumdale Partners, DisclosedRX, Drexi, Edison Health Solutions, EHIM, EmpiRx Health, EvoRx, ExhaleRx, EpiphanyRx. Evernorth, Exouza, Flipt, FutureScripts, Kroger Prescription Plans, Livinti, Lucent Health, LucyRx, MakoRx, Maxor National Pharmacy Services, MedalistRx, MedOne Pharmacy Benefit Solutions, National Script, Navitus Health Solutions, PerformRx, Pharmacy Benefit Dimensions, PharmPix, Phoenix Benefits Management, Prescryptive Health, ProAct Pharmacy Benefit Management, ProCare Rx, Rescription, Rightway, RxAdvance, RxBenefits, RxPreferred Benefits, RxSense, Sav-Rx Prescription Services, ScriptCare, Serve You Rx, SmithRx, The Pharma Force, TransparentRx, TruDataRx, TrueRx, US-Rx Care, Ventegra, Vivid Clear Rx, VersusRx, VIVIO, WellDyne, Wellyfe, XO Health
Struggling with PBM contracts and fiduciary compliance? Let’s talk.
Don’t be a bystander. Change the status quo and reap the benefits of The Health Plan Compliance Advantage.
