I read a LinkedIn post a few days where a broker said he was cold called by a PBM offering a 10% commission payable to the consultant. Around the same time, I was still seeing RFPs asking for lump monthly compensation to be paid from the PBM to the consultant.

Both examples point to the same problem. The industry has placed new expectations on PBM disclosure and transparency, but old compensation practices are still showing up in new proposals. If transparency is going to mean anything, it has to apply across the entire pharmacy benefit ecosystem, including how brokers, consultants, TPAs, and PBMs are paid.

A no-nonsense pharmacy benefit model is not complicated. It starts with a simple idea. The plan sponsor should know where the money goes, who gets paid, why they get paid, and whether those payments align with the best interests of the plan and its members.

The point should sound obvious. In pharmacy benefits, too often it does not reflect how the business works. Too many PBM arrangements still depend on money moving through side doors, including rebates, spread pricing, network differentials, data fees, consultant payments, broker payments, “clinical” programs tied to drug spend, and contract terms only a lawyer could enjoy.

A no-nonsense model strips all of it down. It puts the plan sponsor back in control, makes the economics visible, and forces every stakeholder to answer a basic question. Does this arrangement serve the plan, the members, and the fiduciary standard of care?

Clean PBM Economics

The PBM should not profit from the plan unless the profit is fully disclosed. Preferably, the PBM should earn its revenue through a clearly stated administrative fee. The client sees the fee, understands the fee, and can compare the fee against the work being performed.

A clean fee structure creates better alignment. When a PBM earns revenue in other ways, the incentives get messy fast. If money is tied to rebates, the PBM may benefit when high-cost drugs are used. If money is tied to ingredient cost spreads, the PBM may benefit when the plan pays more than it should. If money comes from sources the client cannot see, the client cannot determine whether the PBM is managing the benefit or monetizing it.

A fiduciary pharmacy benefits administrator should not need hidden economics to be successful. It should be paid for administration, clinical management, service, reporting, implementation, and accountability. The economics should be visible, documented, and easy for the client to verify.

No Unnecessary Cash Outflows

A no-nonsense model also means no unnecessary outflow of plan sponsor cash. Reasonable implementation fees can make sense when real work is involved. A PBM transition requires eligibility setup, benefit configuration, formulary review, clinical program buildout, accumulator coordination, member communications, testing, and go-live support.

Ongoing monthly payments to brokers or consultants from the PBM should not be part of the model. Those payments create questions the client should not have to ask. Who is the consultant working for? Is the recommendation based on the client’s best interest or on a revenue arrangement behind the scenes?

If a broker or consultant provides value, the client should pay them directly. Doing so keeps the relationship clean. It also protects the consultant’s credibility because the advice is no longer connected to an undisclosed or indirect payment stream from the vendor being recommended.

The industry needs to be honest with itself. PBMs are being asked to disclose more, pass through more, and operate with cleaner economics. Fair enough. Brokers, consultants, TPAs, and advisors also have to adjust. If transparency is the standard, compensation arrangements tied to PBM selection should not be buried in RFP terms, side agreements, or monthly payment schedules routed through the vendor.

The same standard applies to pharmacy management services and other add-on arrangements. If a service is needed, define it, price it, disclose it, and measure it. Do not bury it in the PBM’s economics and pretend it is free. Nothing in pharmacy benefits is free. Someone pays, and most of the time, it is the employer.

Client-Owned Data

A no-nonsense model also means the client owns its data. Not summaries. Not dashboards controlled by the vendor. Not reports filtered through someone else’s business interests. The client should own its claims data, rebate data, utilization data, eligibility data, prior authorization data, and pharmacy network data.

Data ownership matters because pharmacy benefit decisions cannot be managed on trust alone. Employers need the ability to verify pricing, monitor trends, evaluate clinical programs, review member disruption, test performance guarantees, and confirm whether contract terms are being followed.

If the client cannot access its own data, the client is not really in control of the plan. A vendor may say all the right things in sales meetings, but without data access, the plan sponsor has no practical way to confirm what is happening behind the scenes.

Full Audit Rights

Full audit rights are part of the same standard. A plan sponsor should have the right to audit claims, pricing, rebates, fees, guarantees, and any other financial arrangement tied to the pharmacy benefit. The audit should not be limited by narrow contract language, unnecessary delays, or vendor-controlled definitions of what can be reviewed.

A fiduciary standard of care requires more than a promise. It requires evidence. Audit rights give the plan sponsor a way to test whether the PBM’s conduct matches the contract and whether the contract matches the employer’s expectations.

In a no-nonsense model, audit rights are not treated as a threat. They are part of good governance. If the PBM is doing what it says it is doing, audit rights should not be a problem.

The Standard Employers Should Expect

In my view, a no-nonsense pharmacy benefit model comes down to a few basic principles.

• The PBM gets paid in a clear and disclosed way.
• The plan sponsor receives all rebates, discounts, and pricing value intended for the plan.
• The PBM does not earn more when drug costs go up.
• The broker or consultant is not quietly paid by the PBM.
• The client owns the data.
• The client has full audit rights.
• The contract supports the fiduciary standard of care instead of working around it.

Employers are not asking for anything radical. They are asking for pharmacy benefits to work the way vendor relationships should have worked all along. They need clean economics, clear contracts, useful data, and a PBM willing to be measured by the same standard it claims to represent.

A no-nonsense pharmacy benefit model means fewer games, fewer excuses, and fewer hidden incentives. More importantly, it means every stakeholder has to live under the same standard they are asking others to meet.

The two primary goals of a pharmacy benefit manager or pharmacy benefit administrator are simple: contain cost and improve outcomes. Outcomes must include safety. If a pharmacy program saves money while exposing members to avoidable risk, it is not well managed. If it improves access but ignores waste, duplicate therapy, poor adherence, inflated drug selection, or unsafe utilization, it is not well managed either.

Cost containment and outcomes have to move together. One without the other creates problems for the plan, the member, and the employer. Many pharmacy programs go off track at this point. The basic goals are easy to state, but vendors often make the process feel more complicated than necessary. Complexity becomes a shield. It keeps employers from asking direct questions and makes ordinary oversight feel like specialized work only insiders can understand.

Pharmacy benefits are technical, but the management framework is not complicated. The job is to set clear standards, follow them, measure results, and hold the people managing the program responsible for performance. Most problems begin when expectations are unclear, hidden, ignored, or changed without the plan sponsor understanding the financial impact.

Once a plan sponsor loses visibility into how drugs are selected, approved, dispensed, and monitored, the program becomes harder to govern. Costs rise, exceptions multiply, and HR is left trying to explain decisions to employees without having full control over the process behind those decisions. This creates frustration for members and risk for the employer.

Managing pharmacy benefits does not require making the program more complex. It requires discipline. The plan needs clear goals, sound clinical standards, defined financial expectations, and useful reporting. Without those basics, even the best-looking PBM arrangement can drift away from the employer’s interests.

Start With Appropriate Drug Selection

Once the goals are clear, the work begins with a basic question: was the appropriate medication selected for the patient? The medication should be clinically appropriate, safe, effective, and cost-conscious. It should fit the patient’s diagnosis, history, prior therapy, risk factors, and benefit design. It should also make financial sense for the plan when lower cost therapies can reasonably produce the same or better outcome.

This is where formulary management, prior authorization, step therapy, quantity limits, clinical edits, specialty drug review, and medication policy come into play. These tools are often described in a way that makes them sound cold or restrictive. Poorly designed, they can be. Properly managed, they protect the patient and the plan. Prior authorization should not exist to create friction for the sake of denying care. It should confirm the drug is being used for the right patient, for the right condition, at the right dose, and at the right point in therapy.

Step therapy should not be a game of delay. It should help determine whether a clinically sound, lower-cost option should be tried before moving to a higher-cost therapy. Quantity limits should not be arbitrary. They should reflect safe dosing, FDA labeling, clinical evidence, and common-sense utilization control. Medication policies should not sit in the background where no employer ever sees them. They are the operating standards behind many pharmacy decisions.

Employers do not need to become pharmacists, but they do need to understand how these standards are built, who approves them, how often they are reviewed, and whether they align with the plan’s goals. When drug selection is handled correctly, pharmacy benefits become much easier to manage. When it is handled poorly, everything downstream gets more expensive.

Drug Selection Is a Governance Issue

Many employers focus too much on discounts, rebates, and guarantees while giving too little attention to drug selection. This has it backwards. A large rebate on the wrong drug is not a win. A low ingredient cost on a medication the patient does not need is not a win. A broad formulary with weak clinical controls may feel member-friendly until the plan sees the claims experience. The real question is not whether the PBM claims to manage trend. The real question is whether the PBM can explain, defend, and document how drugs are selected and monitored.

• Why was the medication approved?
• Was a lower-cost option available?
• Was the member previously treated with an alternative?
• Was the dose appropriate?
• Was the prescription filled through the right pharmacy channel?
• Was the drug medically necessary?
• Was there waste, duplication, or a safety concern?

If those questions cannot be answered clearly, the employer does not have a pharmacy strategy. It has a vendor relationship. Drug selection drives more than the pharmacy claim. It affects member experience, medical claims, adherence, safety, employee trust, and the employer’s ability to manage plan assets.

When plan sponsors treat drug selection as a vendor-only function, they give up control over one of the most important cost and quality levers in the health plan. Good governance does not mean the employer makes clinical decisions. It means the employer understands the standards, reviews the results, and holds the administrator responsible for applying them consistently. Fiduciary oversight becomes practical here. It is not about micromanaging clinical judgment. It is about making sure decisions are made in the best interest of the plan and its members, not around hidden economics or vendor convenience.

Make Sure the Patient Takes the Medication

Selecting the appropriate medication is only part of the job. The patient also has to take it. This is where many plans lose money and outcomes suffer. A drug can be properly selected, properly approved, and reasonably priced. None of it matters if the patient does not take it as prescribed.

Medication adherence is especially important in chronic conditions such as diabetes, high blood pressure, high cholesterol, asthma, depression, and other long-term conditions. Poor adherence can lead to avoidable medical claims, emergency room visits, hospitalizations, disease progression, and lower quality of life. Every employer paying medical and pharmacy claims should care about whether members are taking the medications intended to keep them stable because adherence affects total cost and workforce health.

Adherence can be supported through refill reminders, pharmacist outreach, medication therapy management, synchronized refills, 90-day supplies where appropriate, member education, lower-cost alternatives, and benefit designs that remove unnecessary barriers for high-value drugs. It can also be hurt by poor communication, confusing coverage requirements, unaffordable copays, pharmacy disruption, unnecessary prior authorization delays, and designs built around vendor economics instead of patient behavior.

The issue is not simply whether the member filled the drug. The better question is whether the member is likely taking it consistently enough to receive the intended clinical benefit. A paid claim shows access. It does not always show follow-through. A pharmacy program should be measured not only by whether drugs were dispensed, but by whether members stay on the therapies that protect their health and reduce avoidable costs.

Measure What Matters

Employers do not need a dashboard with 200 metrics. They need a smaller set of measures tied directly to cost containment, outcomes, safety, and member experience. The point is not to bury HR, finance, or the benefits team in reports. The point is to make the program manageable and help the employer make better decisions.

For drug selection, the employer should know whether members are using clinically appropriate, cost-effective therapies. Measures such as generic dispensing, specialty utilization, formulary compliance, prior authorization outcomes, appeals, and high cost claim review help show whether the plan is controlling waste without creating unnecessary barriers to care.

For adherence, the employer should understand whether members with chronic conditions are staying on therapy. Proportion of days covered, often called PDC, is a practical measure. A common threshold is 80% adherence, meaning the member had the medication available for at least 80% of the measurement period. Missed therapy often shows up later as higher medical costs, lower productivity, and worse member outcomes.

For safety and financial management, the employer should expect reporting on duplicate therapy, high risk medications, opioid utilization, dose concerns, total cost of care, rebates, member cost share, specialty trend, and plan paid amounts. Good reporting should tell the employer what happened, why it happened, what is being done about it, and whether the action worked.

A lot of vendor reporting falls short here. It may look polished, but it does not always help the employer govern the program. A useful report should create clarity. It should make the employer smarter, not more dependent on the vendor for interpretation.

Do Not Let Complexity Replace Accountability

Pharmacy benefits become complicated when employers allow vendors to set the standards, control the data, interpret the results, and define success on their own terms. Once this happens, the employer stops managing the benefit and starts reacting to the vendor’s version of the story.

Employers do not need a more complicated program. They need a simpler management framework with accountability built into it. Define the goals. Set the standards. Select appropriate therapies. Make sure patients take their medications. Measure cost, outcomes, safety, and member experience. Review exceptions. Hold vendors accountable. Repeat the process.

The details matter, but the framework is straightforward. Employers, brokers, and pharmacy benefit consultants do not need to accept confusion as the price of admission. Pharmacy benefits should not be a black box. They should be governed like any other major plan asset, with clear standards, clear data, and clear accountability.

When employees do not understand why a drug was denied, changed, or delayed, HR owns the frustration even when the vendor made the decision. Pharmacy benefit governance cannot be treated as a back-office function. It affects employee trust, benefit satisfaction, and the employer’s credibility.

Managing pharmacy benefits is not easy, but it is simpler when the plan sponsor refuses to let the program drift away from its core purpose: contain cost, improve outcomes, protect the patient, and protect the plan. Vendors may benefit when the program feels too complicated to challenge. Employers do not.

Once the basics are nailed down, employers and their consultants can move to more advanced strategies, including disease management programs, targeted clinical interventions, and other initiatives designed to improve outcomes. But those efforts work best when the foundation is already in place. Pharmacy benefits do not need more mystery. They need standards, measurement, transparency, and accountability.

A recent RFP reminded me why pharmacy benefit procurement cannot be judged by spreadsheet pricing alone. After we submitted our proposal, we learned that some competing bidders were quoting brand retail 30 days discounts as high as 33% off AWP. At first glance, that may look attractive. But those discounts are well below WAC and would leave most pharmacies underwater on brand claims. The bigger issue was how the numbers were built.

Even though the RFP instructed bidders not to include embedded discounts, some appeared to fold other financial credits into the brand discount, making the headline number look stronger than the actual pharmacy reimbursement economics could support. In this context, an embedded discount means a credit, offset, rebate value, access fee, or other financial concession included inside a quoted discount instead of being disclosed as a separate line item. Employers, brokers, and consultants cannot rely on headline discounts. They must know what is included, what is excluded, and whether the pricing can actually work at the pharmacy counter. To the consultant’s credit, the following RFP was revised to prevent bidders from repeating the same tactic.

The first trap with PBM RFPs is that too many of them reward the best-looking spreadsheet, not the best deal. A bidder can make a proposal look aggressive by quoting eye-catching discounts, rebate guarantees, and low administrative fees. The employer sees a clean side-by-side comparison and assumes the lowest projected net cost is the winner. I have seen this mistake enough times to know better. A spreadsheet can compare numbers, but it cannot tell you whether those numbers are enforceable, whether the definitions are tight, or whether the bidder has left itself room to soften the offer once the contract is signed.

This is where many RFPs go sideways. They score proposals as if every bidder used the same assumptions and pricing logic. In pharmacy benefits, that is a dangerous assumption. A brand discount can be watered down by drug reclassification. A rebate guarantee can shrink once exclusions are applied. A low admin fee can become much less impressive if other revenue streams sit outside the pricing exhibit. The issue is not that spreadsheets are useless. They are necessary. But they should start the diligence process, not end it.

The second trap is that many RFPs give bidders too much room to maneuver. That sounds like a small process issue, but it can change the outcome. If the RFP says not to include embedded discounts, then the response should not include embedded discounts. If the RFP asks for pass-through pricing, the bidder should explain what is passed through, when it is passed through, and how the employer can verify it. If the RFP asks for a rebate guarantee, the bidder should not be allowed to hide behind broad language, selective exclusions, or definitions that only become clear after finalist selection.

This is where a good consultant earns their fee. The RFP has to force every bidder onto the same playing field. Not roughly the same. The same. That means the pricing assumptions need to be certified. Exclusions need to be disclosed plainly. Definitions need to be nailed down before scoring, not negotiated after the winner is chosen. If a bidder includes credits, access fees, purchasing economics, manufacturer revenue, or any other pricing input that was not requested, they should have to identify it and show how it affects the projected cost. If they do not comply, the response should be adjusted, challenged, or disqualified. Otherwise, the process rewards the bidder willing to bend the rules and penalizes the bidder who followed them.

The third trap is that many PBM RFPs stop at vendor selection instead of building accountability after implementation. This is one of the most common failures I see. A proposal may include strong pricing guarantees, clean disruption reports, and polished service commitments, but the employer still needs a way to verify performance once claims start processing. Without claim-level reporting, audit access, rebate reconciliation detail, service guarantees, implementation milestones, and real consequences for missed commitments, the employer is relying on trust where oversight is required.

That is where fiduciary procurement separates itself from ordinary procurement. The goal is not just to pick a PBM or pharmacy benefit administrator. The goal is to create a structure for monitoring the plan after the award is made. Did the network perform as represented? Were rebates collected and passed through according to the agreed terms? Were claims adjudicated using the promised pricing? Were exclusions applied properly? Were members disrupted beyond what the proposal suggested? These are not academic questions. They are the questions that determine whether the employer got the deal it thought it bought.

Drafting, negotiating, and finalizing a contract with a PBM are the three most important tasks during an RFP. The proposal may get a bidder to the table, but the contract determines whether the employer can enforce what was promised. Too many plan sponsors treat contracting as an administrative step after vendor selection. That is backwards. The contract is where the RFP becomes real. If the pricing, definitions, guarantees, audit rights, reporting obligations, and fiduciary expectations do not make it into the contract, they are little more than sales language.

The strongest RFPs force bidders to prove three things. The pricing must be verifiable. The contract must be enforceable. The model must be accountable after go-live. That requires clear attestations, tight definitions, full disclosure of exclusions, audit rights, reconciliation rules, service guarantees, and consequences for non-compliant responses. More importantly, it requires a mindset shift. The RFP is not just a purchasing document. It is the first draft of the oversight framework.

My view is simple. If a PBM’s offer depends on vague definitions, selective exclusions, nonstandard pricing inputs, or assumptions that cannot be explained plainly, that is not a strong bid. It is a warning sign. A fiduciary procurement process does not chase the lowest bid. It selects the most verifiable, enforceable, and accountable bid. That is the difference between buying a spreadsheet and overseeing a pharmacy benefit plan.

Seven years ago, before pharmacy e-vouchers became mainstream, we brought on a new client quickly started hearing complaints from members. Their out-of-pocket costs at the pharmacy counter had gone up, and in some cases, the increase was significant. From the member’s perspective, the new pharmacy benefit looked worse. They were not thinking about rebates, net cost, formulary intent, or the employer’s fiduciary responsibility. They only knew they were paying more than they had paid before.

When we reviewed the claims, the issue became clear. Under the prior arrangement, manufacturer assistance had been quietly reducing member copays through e-vouchers and coupon like programs. The savings made the prescription feel cheaper to the member, but the plan was often paying more because the voucher helped keep the patient on a higher-cost brand drug. The member liked the lower copay, the manufacturer protected the brand, and the transaction looked smooth at the pharmacy counter. The employer was left with the higher total cost.

That experience changed the way I looked at pharmacy e-vouchers. They are marketed as a patient affordability tool and sometimes they do help a patient fill a medication they might otherwise abandon. But for self-funded employers, the story is more complicated. A lower copay at the counter does not automatically mean a lower cost for the plan. In many cases, the e-voucher improves the member’s short term experience while weakening the employer’s ability to manage the pharmacy benefit in the long term interest of the plan.

What Pharmacy e-Vouchers Really Do

A pharmacy e-voucher is a manufacturer-funded discount delivered electronically during the prescription claims process. Unlike an old fashioned paper coupon or a copay card the member has to present, the e-voucher can be applied automatically. The member may not know why the cost dropped. The pharmacist may only see the claim response. The employer may not see the full transaction details unless its reporting specifically captures manufacturer assistance at the claim level.

The important point is where the voucher sits in the transaction. In many arrangements, manufacturers place e-vouchers through switch operators or claims routing infrastructure. That allows the voucher to be triggered inside the electronic pharmacy claim, often before the employer has a clear view of what happened. The pharmacy counter is no longer the control point. The discount can be embedded upstream in the claims process, which makes it easier for the manufacturer’s strategy to influence the final outcome without much visibility to the plan sponsor.

To the member, this feels like a benefit. A prescription that may have cost $100, $250, or more suddenly costs $25. The member leaves the pharmacy satisfied and any plan design meant to create cost awareness loses its impact. But the plan may still be paying a much higher amount than it would have paid for a preferred generic, biosimilar, therapeutic alternative, or lower net cost brand drug. The member sees the savings. The employer absorbs the economics behind the curtain.

When Copay Relief Becomes Cost Shifting

The dark side of e-vouchers is not the discount itself. The dark side is the way the discount can separate the member’s out-of-pocket cost from the plan’s total cost. Once those two numbers are disconnected, members naturally make decisions based on what they pay at the pharmacy counter. They do not have access to the plan’s net cost. They are not expected to run a fiduciary analysis before picking up a prescription. They respond to the price placed in front of them.

Manufacturers understand this better than anyone. E-vouchers are not random acts of generosity. They are market access tools designed to reduce prescription abandonment, protect brand utilization, and soften the effect of formulary controls. If a drug is placed on a non-preferred tier or faces competition from a lower cost alternative, an e-voucher can make the higher cost drug feel like the better deal to the patient. The manufacturer keeps the prescription. The member gets a lower copay. The plan may pay more.

This is where self-funded employers get hurt. Employers spend real money building formularies, prior authorization criteria, step therapy rules, tiered copays, and other plan design features. Those tools are not meant to create friction for the sake of friction. They are intended to guide members toward clinically appropriate, cost-effective therapy. When an e-voucher overrides the financial signal built into the plan design, it can quietly pull utilization in the opposite direction.

This also explains why members may push back when an employer moves to a more transparent, fiduciary model. If the prior arrangement allowed e-vouchers to reduce member copays on expensive drugs, the old plan may have felt better to the member even when it was worse for the employer. That creates a communication challenge. The employer may be improving governance and lowering total plan cost, while some members only see that they now pay more at the counter for certain brand drugs.

Why Employers Often Miss the Problem

Most employers do not receive enough detail to evaluate e-vouchers properly. Standard pharmacy reporting may show gross cost, ingredient cost, dispensing fee, member cost share, rebates, and total plan paid amounts. But it may not clearly show whether an e-voucher was used, how much manufacturer assistance was applied, whether the assistance counted toward the deductible or out-of-pocket maximum, and whether the claim supported or undermined formulary intent.

That lack of visibility is not a minor reporting gap. It prevents the plan sponsor from understanding who influenced the claim and who benefited from the transaction. The manufacturer may have used the voucher to keep the member on its brand. A switch, coupon processor, PBM, pharmacy, accumulator vendor, or other party may have earned a fee somewhere in the workflow. The member may have received short term relief. The employer may have paid a higher total cost without seeing the full chain of events.

The attached e-voucher workflow illustrates why this matters. Pharmacy claims can pass through multiple entities before the final patient cost and plan paid amount are determined. When manufacturer assistance is introduced into that process, especially through electronic routing, the employer needs claim level visibility to understand the financial effect. Without it, the plan sponsor cannot tell whether the e-voucher helped the plan, helped the member, helped the manufacturer, or simply moved money around in a way that made the benefit harder to manage.

This becomes even more complicated when e-vouchers interact with copay accumulator or maximizer programs. In some arrangements, manufacturer assistance lowers the member’s cost at the pharmacy but does not count toward the deductible or out-of-pocket maximum. The patient may feel protected early in the year, then face a much larger bill once the assistance is exhausted. In other arrangements, maximizer programs are designed to capture more manufacturer assistance for certain specialty drugs. These programs can reduce plan cost in specific cases, but only if the employer understands the fees, member impact, vendor incentives, and claim-level financial flow.

The Fiduciary Standard for e-Vouchers

A self-funded employer does not need to oppose every form of manufacturer assistance. That would be too simplistic. Some members rely on assistance to afford necessary medications, especially when plan designs create high out-of-pocket exposure. The better position is not to ban e-vouchers blindly, but to demand full disclosure and measure whether the arrangement serves the plan and its members.

The fiduciary test should be straightforward. If manufacturer dollars touch the pharmacy benefit, the employer should know. If an e-voucher changes the member’s copay, the employer should know. If a rejected claim is converted into a paid claim through a manufacturer funded pathway, the employer should know. If any vendor earns revenue from the transaction, the employer should know. Hidden money has no place in a fiduciary model.

Self-funded employers should ask direct questions:

1. Self-funded employers should ask direct questions:
2. Which claims used e-vouchers or electronic manufacturer assistance?
3. Which drugs and manufacturers were involved?
4. Did the e-voucher support a preferred or nonpreferred drug?
5. Did the assistance count toward the member’s deductible or out-of-pocket maximum?
6. Were any rejected claims converted into paid claims?
7. What fees were paid to the PBM, switch, coupon processor, pharmacy, or accumulator vendor?
8. Can the plan audit this data at the claim level?

These questions are not anti-member. They are responsible benefit governance. Employers should require reporting that identifies e-voucher use at the claim level. Without this detail, the employer cannot judge whether the voucher improved affordability or weakened the plan’s cost management strategy.

Consultants and brokers should also be careful when comparing pharmacy benefit arrangements based only on member disruption. A plan that allows hidden e-vouchers may appear more member friendly in the short run, especially for people using high cost brand drugs. But if the plan is paying more to preserve those drugs, the employer deserves to know. Lower friction at the counter can come with a higher invoice behind the scenes.

The Bottom Line for Plan Sponsors

E-vouchers are attractive because they solve the problem members feel most directly: the cost they see at the pharmacy counter. But employers fund the benefit and their problem is broader. They must manage total drug spend, clinical appropriateness, vendor incentives, compliance risk, member affordability, and fiduciary oversight. Any program that improves one part of the experience while hiding the rest deserves scrutiny.

The most dangerous pharmacy benefit tools are not always the ones that look expensive. Sometimes, they are the ones that look helpful. E-vouchers can make a high-cost drug feel affordable while allowing the underlying price problem to remain untouched. They can make members believe one plan is better than another based on copay alone. They can also make it harder for employers to implement a disciplined, lowest net cost pharmacy strategy.

Employers should not confuse a lower copay with a better deal. They should not assume manufacturer assistance is free money. And they should not allow any third party to influence plan design without full transparency.

A pharmacy benefit built under a fiduciary standard of care requires visibility into every dollar, every incentive, and every transaction pathway. E-vouchers may have a place, but only when the plan sponsor can see what they are doing. When the member sees the discount and the employer pays the higher bill, the benefit is not being managed transparently. It is being managed around the employer.

Most employers have never read the medication policies controlling high cost drug decisions inside their pharmacy benefit plan. Brokers, consultants, and Benefits Directors spend plenty of time reviewing rebates, discounts, formularies, guarantees, and specialty drug trend. Those items matter. But medication policies are where many day-to-day coverage decisions are actually made. If you have not reviewed these policies, you do not fully know how your pharmacy benefit is being managed.

A medication policy is a written clinical and coverage rule for a specific drug, drug class, or treatment category. It explains when a medication may be covered, what documentation is required, what alternative therapies must be tried first, how much of the drug may be dispensed, and how long the approval lasts. In plain English, it is the rulebook used to decide whether a prescription gets approved, denied, limited, or sent back for more information.

Medication policies are more than clinical paperwork. They are plan governance documents.

These policies matter because many high cost medications are not simple yes-or-no decisions. They involve diagnosis, disease severity, treatment history, FDA labeling, clinical guidelines, safety concerns, quantity limits, and plan-specific product preferences. A good medication policy brings those factors together in one place so decisions are consistent, defensible, and aligned with the plan sponsor’s intent.

Take migraine treatment as an example. Newer migraine therapies, including CGRP inhibitors, can be clinically appropriate for the right patients. They can also create unnecessary cost when used without proper criteria. A migraine medication policy may identify the drugs covered under the category, separate preferred from non-preferred products, and require prior authorization before approval.

For migraine prevention, the policy might require documentation that the member has had at least four migraine days per month for at least three months, has functional impairment, and has already tried guideline recommended preventive medications. For acute migraine treatment, the policy might require documented failure or contraindication to generic triptans before covering a newer, higher cost drug. This is not arbitrary cost control. When properly designed, it is evidence-based management.

A bad medication policy can block appropriate care, frustrate members, and create unnecessary provider abrasion. A good medication policy protects the member, the plan, and the employer. It helps ensure the right drug is used for the right patient, at the right time, for the right clinical reason.

Medication policies are usually created by a pharmacy benefit administrator, PBM, health plan, or delegated clinical team. The better ones are developed by pharmacists and clinicians who review FDA labeling, prescribing information, peer-reviewed literature, specialty society guidelines, safety data, and available therapeutic alternatives. Many are also reviewed by a Pharmacy and Therapeutics Committee, often called a P&T Committee, made up of physicians, pharmacists, and other clinical experts.

This is where the fiduciary issue comes in.

A medication policy should support the plan sponsor’s duty to manage the pharmacy benefit prudently and solely in the interest of the plan and its members. It should not quietly steer utilization toward products that are more profitable for the vendor. A policy can be written to encourage clinically appropriate, lower-net-cost therapy. It can also be written to favor drugs with better economics for the PBM. The employer may never see the difference unless someone asks.

Medication policies are most often used during prior authorization, step therapy, quantity limit review, formulary exception review, and reauthorization. When a prescriber submits a request for a drug requiring review, the clinical reviewer compares the request against the policy.

• Does the patient have the required diagnosis?
• Has the patient tried the required first-line therapies?
• Is the requested drug FDA-approved or supported by current guidelines?
• Is the quantity consistent with labeling and safe use? Is the medication preferred under the plan?
• Is there a lower-cost clinically appropriate alternative?

If the request meets the criteria, the drug may be approved. If not, the request may be denied or returned for more documentation. This process is not perfect and it should not be treated as a substitute for medical judgment. Providers still make clinical decisions. Medication policies are coverage tools. Their purpose is to help the plan apply consistent standards while allowing room for exceptions when properly supported.

Reauthorization is another important use. A drug may be reasonable to try, but that does not mean the plan should keep paying indefinitely if the member is not improving. For expensive therapies, reauthorization criteria often require updated progress notes or evidence of clinical benefit. In migraine, this could include fewer headache days, reduced use of rescue medications, fewer missed workdays, or improved ability to perform daily activities.

This is common sense plan management. If a medication is working, continued coverage may be appropriate. If it is not working, the plan should know.

Quantity limits serve a similar purpose. Some drugs have high cost exposure when use exceeds clinically appropriate limits. A policy may specify how many tablets, injections, syringes, pens, or devices are covered per month. These limits should be tied to FDA labeling, clinical evidence, and accepted practice patterns. They should not be random denial mechanisms.

For brokers and consultants, medication policies are a useful oversight tool. They show how the pharmacy benefit actually functions behind the scenes. Advisors should request the policies for the top cost-driving categories, including GLP-1s, inflammatory conditions, migraine, oncology support drugs, fertility, hemophilia, multiple sclerosis, and rare disease therapies.

Then ask direct questions.

• Who wrote the policy?
• When was it last reviewed?
• What references support it?
• Who approved it?
• How are preferred products selected?
• Are lowest net cost options prioritized?
• How are exceptions handled?
• Does the policy align with the plan document?
• Are denial and appeal decisions being applied consistently?

Benefits Directors should ask these questions before implementation, not after an employee complaint. Learning the rules only after a member is denied care is a poor way to manage a pharmacy benefit plan. The larger point is simple. Medication policies reveal whether your plan is being managed with discipline, transparency, and accountability. They protect patients by grounding decisions in evidence. They protect the plan by reducing inappropriate utilization, unsafe use, and waste. They protect the employer by supporting consistent decisions under a fiduciary standard of care. If you have not reviewed them, you are trusting someone else’s rulebook without knowing what is in it.

Self-funded employers spend months negotiating pharmacy benefit terms, reviewing clinical programs, and selecting a pharmacy benefit manager, only to lose control once claims start processing. The contract may look good. The pricing may look competitive. The clinical strategy may sound reasonable. But if members are routinely filling non-formulary drugs, the plan is bleeding money. A formulary is only as good as the discipline behind it.

That is why formulary compliance matters.

Formulary compliance measures whether the drugs being paid for by the plan align with the plan’s approved drug list. In plain English, it answers a simple question: Are we paying for the drugs we agreed should be covered, or are we paying for exceptions, workarounds, and waste? A practical way to measure formulary compliance is to calculate non-formulary spend as a percentage of total net drug spend:

Formulary Compliance Rate (measured by non-formulary spend %) = non-formulary drug spend ÷ total net drug spend × 100

For this benchmark to be useful, “total net drug spend” must be defined consistently. Start with total allowed pharmacy cost, then subtract all credits that reduce the plan’s true cost, including rebates, drug-level credits, refunds, guarantees, reversals, adjustments, and other post-adjudication pharmacy credits returned to the plan. Copay assistance credits should only be included if the plan actually captures those dollars. Without a clear net spend definition, the non-formulary spend percentage can make compliance look better or worse than it really is.

For example, if a self-funded employer spends $10 million annually on prescription drugs and $250,000 is tied to approved non-formulary claims, the plan’s non-formulary spend rate is 2.5%. In most cases, 2% to 3% or less suggests the formulary is being followed and exceptions are being used appropriately. A rate between 3% and 5% deserves review. Anything above 5% should trigger a deeper audit of exception approvals, therapeutic classes, and whether the PBM or pharmacy benefit administrator is allowing the P&T committee’s work to be bypassed.

This gives HR, finance, and benefits consultants a clean starting point. You can also track the number of non-formulary claims, the number of members using non-formulary medications, and the top therapeutic classes driving the spend. But the dollar impact should come first because that is what reveals whether the issue is material. A strong compliance report should show three things:

1. Total formulary drug spend
2. Total non-formulary drug spend
3. The reason non-formulary claims were approved

Without the reason codes, the report is incomplete. Some exceptions are clinically appropriate. Others are just poor plan management. Good compliance does not mean zero exceptions. That is unrealistic and, in some cases, inappropriate. Good compliance means the plan has a clear formulary, a fair exception process, and a low level of non-formulary spend that can be explained.

Another example, suppose a self-funded employer spends $10 million annually on prescription drugs. If $350,000 is non-formulary spend, that may be acceptable if most of it is tied to documented clinical exceptions, failed step therapy, or continuity-of-care decisions. But if $1.5 million is going to non-formulary drugs with no clear documentation, no prior authorization history, and no therapeutic rationale, that is not member advocacy. That is plan leakage.

This is where the Pharmacy and Therapeutics committee, commonly called the P&T committee, becomes critical. A formulary should not be built by sales teams, rebate departments, account managers, or anyone else with a financial interest in which drugs win preferred placement. It should be built through a clinical review process led by qualified, conflict-free professionals who evaluate safety, efficacy, therapeutic value, and appropriate alternatives.

The most efficient way to measure formulary compliance is to monitor non-formulary spend as a percentage of total net drug spend.

When the P&T committee does its job well, the formulary has clinical credibility. It gives the plan sponsor a defensible basis for coverage decisions. It also helps separate legitimate clinical exceptions from financial manipulation. The problem starts when the work of the P&T committee is circumvented after the fact.

This can happen when non-formulary drugs are routinely approved without documented clinical justification, when rebate arrangements override clinical recommendations, or when “special handling” is used to keep certain high-cost drugs flowing through the plan. Once that happens, the formulary becomes a suggestion instead of a standard.

For self-funded employers, that is dangerous. The plan sponsor may believe it has adopted a clinically sound formulary, while the actual claims experience tells a different story. A fiduciary standard of care requires the employer to know whether the formulary is being followed, whether exceptions are properly documented, and whether financial conflicts are influencing coverage outcomes.

HR leaders often worry that stronger formulary controls will create disruption. That concern is valid. Employees do not want to hear that a drug they have been taking is no longer preferred. HR does not want angry calls, escalations, or disruption during open enrollment.

The answer is not to avoid formulary management. The answer is to manage change with care. Members should receive advance notice, clear alternatives, access to clinical support, and a reasonable exception pathway. Most disruption can be reduced when the process is communicated early and administered consistently.

The bigger problem is that some stakeholders use “access” as a shield against accountability. They argue that formularies restrict care, create red tape, or interfere with the doctor-patient relationship. Sometimes that criticism is sincere. Other times, it is coming from parties that benefit when formularies are loose, confusing, or rebate-driven.

There are three common types of formularies employers should understand.

1. A value-based formulary prioritizes drugs based on clinical effectiveness and total net cost. This model is usually best aligned with fiduciary oversight because it asks whether the plan is paying for the right drug at the right cost for the right reason.
2. A rebate-driven formulary gives preferred placement to drugs that produce favorable rebate economics. This may lower the apparent cost on paper, but it can also favor higher list price drugs and create conflicts between plan savings and PBM revenue.
3. A hybrid formulary blends clinical value, net cost, access, and rebate considerations. This can work, but only if the employer has full transparency into the decision-making process and can verify whether preferred drugs are truly in the plan’s best interest.

My bottom line.

Use 2 percent to 3 percent of total net drug spend as the working benchmark for paid non-formulary spend, 3 percent to 5 percent as a watch zone, and anything above 5 percent as a trigger for immediate review. The public literature suggests many plans have far more leakage than that, especially when formularies are broad or rebate-driven.

Formulary compliance is not about denying care. It is about enforcing the plan’s clinical and financial intent. A self-funded employer that does not monitor non-formulary spend is not managing the pharmacy benefit. It is funding whatever the system allows through. That is not oversight. That is trust without verification, and in pharmacy benefits, that is expensive.

How We Can Work Together

Whether you’re a plan sponsor trying to get control of pharmacy spend, or a broker guiding clients through PBM decisions, education is the fastest way to improve outcomes. If you want a focused, high-value session your team can actually use, here are several ways we can work together.

Option 1: Get Certified

American College of Benefit Specialists (ACoBS) equips benefits professionals with practical knowledge across pharmacy, medical, retirement, and voluntary benefits. Organizations working with ACoBS-certified consultants gain better plan oversight, stronger vendor accountability, and more disciplined cost control. The certification signals a clear commitment to fiduciary guidance and protecting plan assets.

Option 2: Book a Webinar

A clean, educational session for employers, brokers, or TPAs. We’ll cover the most common PBM profit tactics, how to spot contract red flags, and what a fiduciary standard of care looks like in pharmacy benefits. Great for client education and thought leadership.

Option 3: Join the Virtual Roundtable

Bring your internal team (HR, Finance, and Benefits) or your broker group. I’ll lead a live discussion focused on PBM oversight, cost drivers, and what to ask your PBM right now. You’ll leave with a short action list you can use immediately.

Option 4: Get a Quote

Pharmacy benefits now rival medical spend for many plans. Yet most are still governed by contracts few have fully read and pricing models few can clearly explain. That is a fiduciary risk, not just a cost issue.

If you want lower spend, tighter oversight, and alignment you can defend in front of a board or audit committee, act with intent. Certify your team. Educate your clients. Pressure test your PBM.

Self-funded employers often face a difficult tradeoff in pharmacy benefit management. They can reduce unnecessary pharmacy spend or limit member disruption. On the surface, avoiding disruption feels like the safer path. HR teams do not want employees frustrated at the pharmacy counter, calling about medication changes, or asking why a drug that worked yesterday now requires a different process today.

That concern is real. But it can also become expensive. In many pharmacy plans, meaningful savings are available through better formulary management, stronger utilization management, and a more disciplined approach to generic and therapeutic alternatives. The challenge is that those savings often require some level of change for a small portion of members.

The Concern: Member Disruption

When a plan moves from a loose formulary to a more carefully managed one, some members may be affected. A member may need to switch from a brand drug to a generic equivalent. Another may need to move to a lower cost therapeutic alternative. Others may go through prior authorization, step therapy, or an exception review.

That creates anxiety for HR, and understandably so. HR teams often hear the complaints, even when the clinical and financial rationale is sound. No one wants a benefit change to feel like a takeaway, especially when employees are dealing with medications they rely on. But the question should not be, “Will there be any disruption?” A better question is, “Is the disruption clinically appropriate, financially justified, and properly supported?”

Reckless vs. Responsible Disruption

There is a big difference between reckless disruption and responsible disruption. Reckless disruption happens when members are forced through confusing changes without support, communication, or clinical review. That creates frustration and can harm trust. Responsible disruption looks different. It includes:

• Advance member notice before changes take effect
• Prescriber outreach when therapy changes may be needed
• Clear therapeutic alternatives when clinically appropriate
• Exception protocols for members with legitimate clinical needs
• Pharmacist support for members who need help navigating the change

That is not disruption for the sake of savings. That is fiduciary plan management.

The Fiduciary Issue

Self-funded employers have a duty to manage plan assets carefully. Every unnecessary dollar spent on an avoidable high-cost medication is a dollar that cannot be used for wages, benefits, reserves, or other priorities. When lower-cost alternatives are clinically appropriate, ignoring them is not member advocacy. It is poor stewardship.

Take a simple generic dispensing rate example. Assume a self-funded plan spends $10 million annually on pharmacy claims and has an 80% generic dispensing rate. If stronger formulary management, utilization management, and member support can move that plan to a 90% generic dispensing rate, the plan gains ten percentage points of improvement.

If each one point increase in generic dispensing rate produces an estimated 4% gross savings, the math is hard to ignore. A ten point improvement would represent an estimated 40% gross savings opportunity. On a $10 million annual pharmacy spend, that equals approximately $4 million in potential gross savings.

That does not mean every plan will capture the full amount. Savings depend on the drug mix, brand utilization, specialty exposure, rebates, member behavior, prescriber cooperation, and how well the transition is managed. But the example makes the fiduciary point clear. Even modest improvements in generic dispensing can create major financial consequences for a self-funded employer.

A low generic dispensing rate, high non-formulary spend, or excessive use of non-preferred brands can signal that the plan is paying more than necessary. These patterns do not always mean care is better. Often, they mean the formulary is not being managed tightly enough, the incumbent PBM has not applied sufficient controls, or the plan sponsor has not been given a clear picture of the tradeoffs.

The Cost of Doing Nothing

HR teams often feel caught between two pressures: controlling pharmacy costs and avoiding employee complaints. That tension is real. But avoiding every difficult conversation is not a strategy. It usually means the plan is allowing historical prescribing patterns, manufacturer influence, or PBM economics to drive decisions.

Before implementing any major formulary or utilization management change, the affected member population should be reviewed carefully. Some members may have direct generic equivalents available. Others may have lower-cost therapeutic alternatives. Some cases may require clinical review. A smaller group may need more hands-on support to avoid confusion or gaps in therapy.

This is where many employers make the wrong comparison. They compare the discomfort of change against the comfort of doing nothing. But doing nothing has a cost, and in pharmacy benefits, that cost can be substantial.

The Better Standard

The purpose of a well-managed pharmacy benefit is not to keep everything exactly as it is. It is to protect members while protecting the plan. Sometimes that means change. Sometimes it means telling a member, “There is a clinically appropriate alternative, and the plan will support you through the transition.”

That message is not anti-member. It is honest. Most employees do not know whether their medication is preferred, non-preferred, non-formulary, or clinically replaceable. They only know what their doctor prescribed and what they pay at the pharmacy counter. It is the plan’s responsibility, with the right pharmacy benefit administrator, to create a structure that helps members get appropriate care without wasting plan dollars.

Disruption should be minimized, not worshipped. The better goal is not zero disruption. The better goal is the right disruption, for the right reasons, with the right support. For self-funded employers, that distinction can be worth millions.

How We Can Work Together

Whether you’re a plan sponsor trying to get control of pharmacy spend, or a broker guiding clients through PBM decisions, education is the fastest way to improve outcomes. If you want a focused, high-value session your team can actually use, here are several ways we can work together.

Option 1: Get Certified

American College of Benefit Specialists (ACoBS) equips benefits professionals with practical knowledge across pharmacy, medical, retirement, and voluntary benefits. Organizations working with ACoBS-certified consultants gain better plan oversight, stronger vendor accountability, and more disciplined cost control. The certification signals a clear commitment to fiduciary guidance and protecting plan assets.

Option 2: Book a Webinar

A clean, educational session for employers, brokers, or TPAs. We’ll cover the most common PBM profit tactics, how to spot contract red flags, and what a fiduciary standard of care looks like in pharmacy benefits. Great for client education and thought leadership.

Option 3: Join the Virtual Roundtable

Bring your internal team (HR, Finance, and Benefits) or your broker group. I’ll lead a live discussion focused on PBM oversight, cost drivers, and what to ask your PBM right now. You’ll leave with a short action list you can use immediately.

Option 4: Get a Quote

Pharmacy benefits now rival medical spend for many plans. Yet most are still governed by contracts few have fully read and pricing models few can clearly explain. That is a fiduciary risk, not just a cost issue.

If you want lower spend, tighter oversight, and alignment you can defend in front of a board or audit committee, act with intent. Certify your team. Educate your clients. Pressure test your PBM.

A pharmacy claim can look clean and still be wrong. That is the uncomfortable truth employers need to understand. A drug can pass through adjudication, meet the plan’s coverage rules, generate a paid claim, and still fail the most important test: whether that medication is appropriate, necessary, and likely to work for the patient.

Clinical rigor is the discipline that closes that gap.

Over the past 10 years, while onboarding new clients, our team has identified dozens of situations where drugs costing more than $100,000, per year, had already been adjudicated and approved, only for genetic testing to later reveal they were unlikely to work for the patient. That is not a minor oversight. It is a break in the evidence trail before plan assets were spent.

The key elements include:

• Pharmacogenomics gives employers and fiduciaries another layer of clinical protection. It can help determine whether a patient’s genetic profile makes a drug ineffective, unsafe, or less appropriate than another therapy. Pharmacogenomics is not relevant to every drug or every patient, but where it is clinically indicated, it should be part of the review before a high-cost approval. For high-cost therapies, especially specialty medications, this should not be treated as academic medicine. It is practical plan governance.
• Medication therapy management is just as important. This becomes even more critical when plans use international mail programs or when claims adjudicate outside the normal electronic workflow. When a claim bypasses the standard drug utilization review process, the plan may also lose basic clinical safeguards, including checks for duplicate therapy, drug-drug interactions, contraindications, and dosing concerns. A lower unit cost is not a bargain if clinical oversight is stripped out of the transaction.
• Utilization management must also carry real clinical weight. Prior authorization should not be a paperwork ritual. A credible PA process should review FDA labeling, clinical trial checkpoints, patient selection criteria, diagnosis confirmation, contraindications, and prior therapy history. The question should not be, “Was the form completed?” The question should be, “Does this patient match the evidence that supports use of this drug?”
• Formulary management is where fiduciary discipline often gets tested. Employers should know the difference between a rebate-driven formulary, which may favor drugs that improve PBM economics and a value-based formulary, which weighs clinical effectiveness, safety, total net cost, and patient outcomes. But even a sound formulary can be undermined if a conflict-free P&T committee’s evidence-based decisions are bypassed by rubber stamped prior authorizations. The PA process should defend the formulary’s clinical logic, not quietly dismantle it.
• Medication adherence is the last piece, and it is often the most measurable. Plans should track proportion of days covered, or PDC, to understand whether members are actually taking their medications as prescribed. Poor adherence turns good prescribing into poor outcomes and can drive avoidable medical spend.

Clinical rigor is not about slowing care down.

It is about refusing to let plan dollars move faster than the evidence. For employers with fiduciary responsibilities, that distinction matters. A pharmacy benefit should not merely pay claims. It should prove, before and after payment, that the therapy was worth funding.

How We Can Work Together

Whether you’re a plan sponsor trying to get control of pharmacy spend, or a broker guiding clients through PBM decisions, education is the fastest way to improve outcomes. If you want a focused, high-value session your team can actually use, here are several ways we can work together.

Option 1: Get Certified

American College of Benefit Specialists (ACoBS) equips benefits professionals with practical knowledge across pharmacy, medical, retirement, and voluntary benefits. Organizations working with ACoBS-certified consultants gain better plan oversight, stronger vendor accountability, and more disciplined cost control. The certification signals a clear commitment to fiduciary guidance and protecting plan assets.

Option 2: Book a Webinar

A clean, educational session for employers, brokers, or TPAs. We’ll cover the most common PBM profit tactics, how to spot contract red flags, and what a fiduciary standard of care looks like in pharmacy benefits. Great for client education and thought leadership.

Option 3: Join the Virtual Roundtable

Bring your internal team (HR, Finance, and Benefits) or your broker group. I’ll lead a live discussion focused on PBM oversight, cost drivers, and what to ask your PBM right now. You’ll leave with a short action list you can use immediately.

Option 4: Get a Quote

Pharmacy benefits now rival medical spend for many plans. Yet most are still governed by contracts few have fully read and pricing models few can clearly explain. That is a fiduciary risk, not just a cost issue.

If you want lower spend, tighter oversight, and alignment you can defend in front of a board or audit committee, act with intent. Certify your team. Educate your clients. Pressure test your PBM.

I recently asked ChatGPT to score our pharmacy benefit administrator (PBA) services agreement on how much control and transparency it gives self-funded employers. Here was the prompt: “Act as an ERISA attorney and pharmacy benefits expert. Score the attached contract on a scale of 1 to 10 on how much control and transparency it provides to self-funded employers.” The score came back 9.6 out of 10. Skeptical? Good. You should be.

In pharmacy benefits, big transparency claims deserve pressure testing. So call my bluff. Ask for the agreement. Read the audit clause. Review the rebate language. Look at who controls the formulary, specialty pharmacy arrangements, network strategy, data access, and plan economics.

Then do the same with your current PBM or PBA agreement. Use the same prompt. Pressure test the contract you already have in place. The answer may show whether your agreement gives the plan sponsor enforceable control, or whether it relies too heavily on vendor promises. What surprised me was not the score itself. It was how much the score changed when the contract posture changed.

Prompt: Act as an ERISA attorney and pharmacy benefits expert. Score the attached contract on a scale of 1 to 10 on how much control and transparency it provides to self-funded employers.

The existing version, built around a fiduciary pharmacy benefit administrator model, scored 9.6 out of 10. The reason was straightforward. The agreement gave the employer final authority over plan design, formulary, utilization management, pharmacy network decisions, manufacturer contracting, rebate strategy, and coverage policy. TransparentRx did not have discretionary authority over those decisions. It also included broad audit rights, pass-through economics, specialty compensation disclosure, and client ownership of plan-attributable rebates, credits, discounts, fees, and other financial benefits.

Then I asked a different question: what happens if the fiduciary language is removed and the contract describes the company as a pharmacy benefit manager instead of an administrator?

The score dropped to roughly 7.2 out of 10. That is not a cosmetic change. It affects money, oversight, and CAA documentation. Contract posture has financial and compliance consequences. If an agreement reads like a conventional PBM contract, the employer may lose leverage over the very items that determine whether the plan is truly being managed in its best interest:

• Rebate strategy and whether all plan-attributable rebates are disclosed, reconciled, and returned.
• Specialty pharmacy economics, including margins, referral arrangements, data fees, service fees, and affiliate relationships.
• Audit access to claims-level data, pharmacy reimbursement records, MAC list application, manufacturer payments, aggregator records, and subcontractor compensation.
• CAA RxDC reporting at the plan level, not just the vendor’s aggregate book of business. Aggregate reporting may help a vendor complete a filing, but it does not give the employer enough visibility to verify its own prescription drug spend, rebates, high-cost drugs, top drugs, member cost-sharing, or vendor compensation. Plan-level reporting ties the data back to the employer’s actual claims experience, which is what fiduciaries need for cost oversight, renewal decisions, rebate reconciliation, and CAA documentation.
• Fiduciary documentation. A weaker contract can make it harder for the plan sponsor to show it had the contractual right to obtain, review, and verify the financial data behind pharmacy spend.

Transparency is not meaningless. It is essential, but it has to be enforceable.

A vendor can say it is transparent, but the contract must give the plan sponsor the right to obtain, audit, reconcile, and use the data needed to manage the plan, verify financial performance, and meet reporting obligations. In pharmacy benefits, transparency without contractual rights is just a talking point.

Here is the scorecard under the existing service agreement:

The lesson is simple: contract labels matter, but contract authority matters more. 

A self-funded employer should know exactly where control sits. That means knowing who controls the plan, formulary, rebate strategy, and pharmacy network. It also means knowing who owns the data, who can audit the financial flows, and who receives every dollar tied to the plan.

Brokers, consultants, and Benefit Directors should not stop at “transparent PBM” language. Ask for the agreement. Read the audit clause. Review rebate ownership. Check specialty compensation. Confirm who has final decision-making authority. Then ask one direct question: does this agreement give the plan sponsor enforceable control, or does it leave the employer relying on vendor promises?

How We Can Work Together

Whether you’re a plan sponsor trying to get control of pharmacy spend, or a broker guiding clients through PBM decisions, education is the fastest way to improve outcomes. If you want a focused, high-value session your team can actually use, here are several ways we can work together.

Option 1: Get Certified

American College of Benefit Specialists (ACoBS) equips benefits professionals with practical knowledge across pharmacy, medical, retirement, and voluntary benefits. Organizations working with ACoBS-certified consultants gain better plan oversight, stronger vendor accountability, and more disciplined cost control. The certification signals a clear commitment to fiduciary guidance and protecting plan assets.

Option 2: Book a Webinar

A clean, educational session for employers, brokers, or TPAs. We’ll cover the most common PBM profit tactics, how to spot contract red flags, and what a fiduciary standard of care looks like in pharmacy benefits. Great for client education and thought leadership.

Option 3: Join the Virtual Roundtable

Bring your internal team (HR, Finance, and Benefits) or your broker group. I’ll lead a live discussion focused on PBM oversight, cost drivers, and what to ask your PBM right now. You’ll leave with a short action list you can use immediately.

Option 4: Get a Quote

Pharmacy benefits now rival medical spend for many plans. Yet most are still governed by contracts few have fully read and pricing models few can clearly explain. That is a fiduciary risk, not just a cost issue.

If you want lower spend, tighter oversight, and alignment you can defend in front of a board or audit committee, act with intent. Certify your team. Educate your clients. Pressure test your PBM.

Buying pharmacy benefits is no longer a routine procurement exercise. For brokers, consultants, CFOs, and HR leaders, PBM oversight now sits squarely in the risk management category. The wrong contract, the wrong data rights, or the wrong internal assumptions can cost a plan millions. Here are six non-negotiables every pharmacy benefits purchaser should demand.

Knowledgeable staff

A prudent process starts with competent people. The fiduciary standard does not require perfection, but it does require informed decision-making. That means the employer, broker, consultant, and internal benefits team must understand how PBMs make money, how to design a pharmacy benefit, how to evaluate clinical management, how specialty drugs are priced, and where conflicts of interest appear.

The “prudent expert” requirement matters. If the plan sponsor does not have that expertise internally, it must hire it. Relying on a PBM to explain whether its own arrangement is fair is not oversight. It is delegation without control.

Vendor contract access

Purchasers need access to vendor contracts, not just summaries, assurances, or sanitized reporting. One reason is international mail order pharmacy arrangements. In some cases, drugs sourced through these channels are marked up by 2,000% or more before being passed through the benefit plan.

That kind of spread does not show up clearly in a typical PBM performance review. It is buried in related-party arrangements, subcontractor agreements, specialty pharmacy terms, or opaque purchasing structures. If the purchaser cannot see the underlying contracts, it cannot verify whether pricing is fair.

Claim data access

Access to complete, usable, plan-level claim data is no longer optional. The Department of Labor and Consolidated Appropriations Act enforcement environment will only put more pressure on plan fiduciaries in 2026 and beyond.

Plan sponsors need data that allows independent review of drug pricing, rebates, fees, specialty claims, formulary decisions, prior authorization outcomes, and pharmacy reimbursement. A PDF summary from the PBM is not enough. Purchasers need raw data rights, audit rights, and the ability to share data with independent advisors working on behalf of the plan.

Medical benefit drug claim oversight

High-cost drugs are not only paid through the pharmacy benefit. Many are billed under the medical benefit through physician offices, hospital outpatient departments, infusion centers, and specialty clinics. These claims may involve J-codes, HCPCS codes, units, modifiers, and provider markups that are difficult to monitor without the right data.

Purchasers should require access to medical drug claim data and an independent review process to evaluate pricing, units billed, site-of-care patterns, duplicate billing, and opportunities to move select drugs to lower-cost channels when appropriate. PBM oversight is incomplete if medical benefit drug spend is ignored.

Fiduciary PBM contract

There is a difference between a fiduciary PBM contract and a contract that uses friendly language like “fiduciary aligned.” Purchasers should not accept branding, slogans, or partial transparency as a substitute for enforceable fiduciary obligations.

A real fiduciary PBM contract should define who the PBM serves, how compensation is earned, what revenue must be disclosed, what must be passed through, and what happens when conflicts arise. If the PBM keeps spread pricing, hidden rebates, data fees, manufacturer payments, pharmacy network revenue, or GPO income, the contract should say so plainly.

Adequate resources

PBM oversight requires independent tools. Do not rely solely on PBM self-reporting. The plan sponsor should have its own resources to validate pricing, benchmark claims, review specialty costs, and test contract performance.

At a minimum, purchasers should have access to an independent AWP price reporting agreement or similar pricing validation resource. Without it, the plan is asking the PBM to grade its own paper.

The larger point is simple: pharmacy benefits purchasers cannot manage what they cannot see, test, or enforce. A fiduciary standard of care demands more than a competitive RFP. It demands evidence, access, expertise, and contractual accountability.

How We Can Work Together

Whether you’re a plan sponsor trying to get control of pharmacy spend, or a broker guiding clients through PBM decisions, education is the fastest way to improve outcomes. If you want a focused, high-value session your team can actually use, here are several ways we can work together.

Option 1: Get Certified

American College of Benefit Specialists (ACoBS) equips benefits professionals with practical knowledge across pharmacy, medical, retirement, and voluntary benefits. Organizations working with ACoBS-certified consultants gain better plan oversight, stronger vendor accountability, and more disciplined cost control. The certification signals a clear commitment to fiduciary guidance and protecting plan assets.

Option 2: Book a Webinar

A clean, educational session for employers, brokers, or TPAs. We’ll cover the most common PBM profit tactics, how to spot contract red flags, and what a fiduciary standard of care looks like in pharmacy benefits. Great for client education and thought leadership.

Option 3: Join the Virtual Roundtable

Bring your internal team (HR, Finance, and Benefits) or your broker group. I’ll lead a live discussion focused on PBM oversight, cost drivers, and what to ask your PBM right now. You’ll leave with a short action list you can use immediately.

Option 4: Get a Quote

Pharmacy benefits now rival medical spend for many plans. Yet most are still governed by contracts few have fully read and pricing models few can clearly explain. That is a fiduciary risk, not just a cost issue.

If you want lower spend, tighter oversight, and alignment you can defend in front of a board or audit committee, act with intent. Certify your team. Educate your clients. Pressure test your PBM.