Most HR departments don’t have a pharmacy benefit team. They rely on brokers or health plan reps to manage the PBM, rarely dig into pharmacy-specific metrics, and assume someone else is watching the details. But pharmacy benefits are where the real complexity and often the greatest waste lives.

If you’re in HR and pharmacy benefits are buried in your broader health plan workflow, this is your opportunity. A small, focused team or even just the right external partners can unlock savings, improve member outcomes, and give your plan the transparency it deserves.

Here’s how smart HR leaders are making it happen.

Start With a Fiduciary Mindset

Pharmacy benefits shouldn’t be managed as just another health plan line item. Most PBMs operate on a profit model that rewards opacity and misalignment. The only way around that is to establish fiduciary-level oversight, acting solely in the best interest of your plan and its members.

Even if you don’t have internal pharmacy experts, you can adopt a fiduciary mindset by bringing in partners who work exclusively for you. That means no commissions, no hidden fees, and no loyalty to anyone but your plan.

The Roles That Matter Most

You don’t need a new department. But you do need someone thinking about pharmacy every day. That might mean reallocating responsibilities within HR or outsourcing to fiduciary-aligned consultants. These are the core roles worth investing in:

• Pharmacy Benefit Strategist Brings experience from inside the PBM world. Knows what to ask, what to audit, and how to negotiate terms that actually protect your plan.
• Contract and Procurement Lead Reviews PBM contracts with a fine-tooth comb. Looks for soft guarantees, ambiguous language, and misaligned incentives.
• Data Analyst or Actuarial Support Translates raw claims into clear insights. Helps model new benefit designs, forecast impact, and identify cost drivers.
• Clinical Oversight (Pharmacist or Consultant) Ensures utilization management is rooted in evidence, not just cost-shifting. Essential for specialty, GLP-1s, and PA protocols.
• Project Manager or Implementation Lead Keeps audits, vendor changes, and benefit updates on track. Without this role, good strategy gets stuck in limbo.

Strengthen Your Oversight to Get More from Your PBM Relationship

Your PBM plays a critical role in managing drug costs, access, and outcomes. Like any complex vendor relationship, the more engaged and informed your team is, the better results you will see.

A dedicated pharmacy benefit team allows HR to become an active participant in decision-making rather than just a recipient of updates. This improves the PBM partnership by bringing more clarity, better communication, and shared accountability.

When your team is prepared to review data, manage contracts, and provide clinical insight, it creates the structure for a stronger partnership. Your PBM can focus on delivering value, while your team ensures that value aligns with your plan’s goals. It’s not about stepping on toes. It’s about stepping up.

Build Audit and Oversight Into Your Routine

Oversight isn’t just an annual rebate check. A good pharmacy benefit team will regularly review:

• Rebate guarantees and actual pass-through
• Formulary changes and exclusions
• Prior authorization outcomes
• Specialty drug channel utilization
• MAC pricing accuracy

These audits don’t need to be in-house, but your team should know what to look for and when to push back.

Invest in Education

Pharmacy is the fastest-evolving part of your health plan. New therapies, pricing schemes, and legislative changes hit every quarter. If your team isn’t staying current, it’s easy to fall behind and costly when you do.

Certifications like the CPBS (Certified Pharmacy Benefits Specialist) can bring your team up to speed quickly and create a common language between HR, finance, and procurement.

Start Small. Just Start.

One employer we worked with started with just three people: the benefits manager, an ERISA attorney, and a part-time pharmacist consultant. They didn’t restructure HR. They just shifted focus and brought in help where needed. Within six months, they uncovered overcharges, corrected rebate discrepancies, and improved member experience through better utilization review.

You don’t need to build a large team. You need a focused one with the right questions, tools, and accountability measures in place.

Conclusion

The missing piece in most HR benefits strategies isn’t a better PBM. It’s a better approach to oversight. Building even a small pharmacy benefit team puts you back in control and turns your benefit plan into a strategic asset.

Ready to get started? Let’s talk about how to build the right structure for your organization: lean, focused, and built to protect your plan.

83% of Americans Unwilling to Pay More Than $100 for GLP-1s, Survey Shows and other news from around the interweb:

• 83% of Americans Unwilling to Pay More Than $100 for GLP-1s, Survey Shows. While Americans understand the benefits of GLP-1 agonist medications, 83% of Americans are unwilling to pay more than $100 in monthly health insurance premiums for them, even if they were covered, according to the results of the recent KPMG American Perspectives Survey. Willingness to pay differed across age groups. Gen Z was the most likely to pay at 27%, followed by 21% of Millennials, 14% of Gen X and just 6% of Baby Boomers, indicating a generational divide.

• Patients Taking Newer Weight Loss Drugs Likely to Return to Their Original Weight Within 2 Years, Study Says. A new analysis discovered that patients who stop using weight loss drugs like Wegovy and Mounjaro are likely to regain the total weight they had lost in less than two years. The review, conducted by the University of Oxford’s Biomedical Research Centre, sought to measure weight gain after stopping the use of weight loss medication, or GLP-1 receptor agonists. Researchers determined that ceasing older weight loss medications resulted in a return to original weight within one year — and less than two years for newer weight loss medications.

• Recalibrating employee benefits: How companies are delivering value in a cost-constrained world. As employers head further into 2025, one message is clear: the old rules of employee benefits are fundamentally changing. With rising costs, economic instability, and employees demanding more support and personalization, organizations must transform how they think about benefits. Yet, this isn’t a story of increased budgets and ever-increasing programs. Instead, it’s a story of smarter spending, sharper focus and using benefits as a strategic tool to drive engagement, retention, and purpose.

• How to Create an AI Foundation for Your Benefits Strategy. Employers want to use artificial intelligence-driven analytics to drive up benefits engagement but need the right foundation in place to generate these insights. One in two employers believe that acting on analytical insights will lead to improved employee performance and engagement. It’s therefore unsurprising that employers across the globe are now planning to use AI (artificial intelligence) to generate these insights. More than eight out of 10 (85%) HR professionals plan to use AI in relation to their employee benefits over the next year. The overall goal is to understand their people and tailor employee benefits, communications, and experiences to drive up benefits engagement.

Why TransparentRx Is Your Trusted Partner for Smarter Pharmacy Benefits

At TransparentRx, we specialize in delivering fiduciary pharmacy benefit management services that prioritize transparency, cost containment, and optimal patient outcomes. Our unique approach helps self-funded employers, benefits consultants, and health plan sponsors navigate the complexities of pharmacy benefits while reducing costs and enhancing care.

If you’re ready to take control of your pharmacy benefit strategy and eliminate hidden fees, contact TransparentRx today for a consultation. Let us help you achieve smarter, more effective benefits management.

If your PBM offers point solutions, it may tout a dozen digital tools and apps, such as drug price checkers, copay maximizers, and adherence programs, but if employees aren’t using them, they’re just noise.

And here’s the uncomfortable truth: most point solutions fail quietly. HR rarely hears about it until the plan year ends and the cost savings they were promised didn’t show up.

So why aren’t employees engaging with these tools? It usually boils down to three things: they’re disconnected, poorly promoted, or frustrating to use. And that’s a PBM problem, not an HR one.

A relevant excerpt from Nudge: Improving Decisions About Health, Wealth, and Happiness by Richard H. Thaler and Cass R. Sunstein is:

“A nudge, as we will use the term, is any aspect of the choice architecture that alters people’s behavior in a predictable way without forbidding any options or significantly changing their economic incentives.”

Integration is everything

Point solutions shouldn’t feel like third-party bolt-ons. If your PBM is serious about outcomes, they’ll embed these tools directly into your existing member portal with single sign-on and real-time data syncing.

If your team has to remind employees to “also check this other tool” for savings, it has already failed.

Engagement requires more than an email blast

Employees are overwhelmed with benefits information. If a point solution is going to make a difference, communication must be timely and personalized.

For example, Mark Cuban’s Cost Plus Drugs, Built In:

When we integrated Mark Cuban Cost Plus Drug Company pricing into our member portal, we didn’t just offer a link. We embedded the pricing engine directly into the member experience.

Here’s what that looked like:

• Members search for a drug in the portal and instantly see Cost Plus pricing side by side with their plan benefit price.
• If Cost Plus is cheaper, we don’t just show it, we guide the member through the purchase process, including physician coordination when needed.
• No new account. No extra login. Just real-time data, simple instructions, and fast results.

That’s what drives engagement: relevance, timing, and ease.

Design like it’s 2025

If the interface looks like it was built during the Blackberry era, no one’s touching it. These tools must be mobile-first, intuitive, and backed by live support when needed. No friction. No confusion. Just a clear benefit and a straightforward way to use it.

What HR can do

• Ask your PBM for usage data. If fewer than 30% of eligible members are engaging, that’s a red flag.
• Push for integration. Demand tools that are built into the member portal—not just added on.
• Tie point solutions to plan design. If a lower-cost option exists but isn’t surfaced automatically, the PBM isn’t doing its job.

Your goal isn’t to offer more tools. It’s to offer fewer tools that work. If engagement isn’t baked in, then savings and outcomes are just marketing copy. And that’s not good enough, not for your employees, and not for your health plan.

Private Equity Firms Gobbling Up Health Care Facilities at a Skyrocketing Pace and other news from around the interweb:

• Private Equity Firms Gobbling Up Health Care Facilities at a Skyrocketing Pace. In 2024 Steward Health Care filed for bankruptcy, depriving socioeconomically disadvantaged communities of essential health services, straining nearby state hospitals, and leaving more than 4,430 health providers, staff, and administrators out of a job. Steward, formerly the Caritas Christi Health Care System, was once the second-largest health care system in New England, employing over 12,000 people and serving more than one million patients each year—from poor and working-class communities. A nonprofit system of six Catholic hospitals in cities like Brockton, Dorchester and Fall River, Caritas was acquired in 2010 by the private equity firm Cerberus Capital Management. Cerberus, which takes its name from the mythical three-headed dog that guards the gates of the underworld, converted Caritas into a for-profit system and rebranded it as Steward Health Care.

• Patients Taking Newer Weight Loss Drugs Likely to Return to Their Original Weight Within 2 Years, Study Says. A new analysis discovered that patients who stop using weight loss drugs like Wegovy and Mounjaro are likely to regain the total weight they had lost in less than two years. The review, conducted by the University of Oxford’s Biomedical Research Centre, sought to measure weight gain after stopping the use of weight loss medication, or GLP-1 receptor agonists. Researchers determined that ceasing older weight loss medications resulted in a return to original weight within one year — and less than two years for newer weight loss medications.

• Stuck in the Middle: Self-Funded Health Plans and Recent Challenges to State PBM Laws. In recent years, prescription drug prices have been top-of-mind for state legislators, who have responded by passing laws that seek to control that pricing in a variety of ways, including by regulating pharmacy benefit managers (PBMs). While states are permitted to regulate fully insured products offered in their state, including mandating the benefits that insurers must offer, the Employee Retirement Income Security Act of 1974, as amended (ERISA) preempts state laws that impermissibly relate to self-funded employer-sponsored health plans that are subject to ERISA.

• New law raises prescription drug costs for most Hoosiers. Because most Hoosiers rely on their employers for health care coverage and the manufacturing industry employs 1 in 5 Hoosiers, the Indiana Manufacturers Association (IMA) has long championed efforts to control spiraling health care costs. This issue is critical to individuals and employers alike, and the IMA is encouraged that Indiana has seen a lot of improvement on this topic in recent legislative sessions. Senate Enrolled Act 140, however, takes a step in the wrong direction. By mandating pharmacy dispensing fees, SEA 140 will ultimately burden employers and individuals with higher prescription drug expenses across the board. At the heart of our concern is the provision within SEA 140 that mandates insurers, pharmacy benefit managers, or other administrators of pharmacy benefits to reimburse pharmacies at a rate that includes “a fair and reasonable dispensing fee.” This mandated fee will raise prescription drug costs on consumers.

Why TransparentRx Is Your Trusted Partner for Smarter Pharmacy Benefits

At TransparentRx, we specialize in delivering fiduciary pharmacy benefit management services that prioritize transparency, cost containment, and optimal patient outcomes. Our unique approach helps self-funded employers, benefits consultants, and health plan sponsors navigate the complexities of pharmacy benefits while reducing costs and enhancing care.

If you’re ready to take control of your pharmacy benefit strategy and eliminate hidden fees, contact TransparentRx today for a consultation. Let us help you achieve smarter, more effective benefits management.

When I started out in the pharmaceutical industry nearly 20 years ago, I didn’t know what I didn’t know. Like many HR leaders, CFOs, and benefit consultants stepping into the space today, I assumed the PBM industry ran on the same principles as every other vendor relationship: transparent pricing, aligned incentives, clear accountability. It doesn’t. If I were starting over today as a pharmacy benefits buyer, here’s exactly what I’d focus on:

1. Don’t confuse “discounts” with savings The biggest mistake I made early on was letting rebate guarantees and AWP discounts sway my decisions. They sounded impressive. But I learned quickly that these figures can be gamed. They’re built to distract. The real cost is the total cost of care, after everything, including spread pricing, clawbacks, and DIR fees, are brought forward. That’s the only number that matters.

2. Push for audit rights and actually use them Most contracts offer audit language that sounds good but is practically useless. If I were starting fresh, I’d make sure the contract grants real audit access to claims-level detail, pricing logic, and rebate reconciliation. More importantly, I’d use that right annually. Trust isn’t a strategy.

3. Ask how the PBM gets paid and why I used to avoid this question. Now it’s the first one I ask. If your PBM’s revenue grows when your drug spend increases, the relationship is misaligned by default. I’d look for a flat-fee model where they earn more when I spend less and outcomes improve.

4. Treat formulary control as a power lever This one took me a while to grasp. Most employers give up formulary control without realizing it’s their most valuable lever. If I were new to the space, I’d demand visibility into formulary decisions and keep clinical integrity front and center.

5. Make sure my broker or consultant knows more about pharmacy benefits than sales If the person advising me on multi-million-dollar drug spend can’t explain lesser of logic, generic substitute rate, earnings after cash disbursements (EACD), or channel conflict, I’m out. I’d only work with brokers or consultants who’ve invested in technical knowledge. A telltale sign they’re more focused on sales than strategy is when they obsess over member disruption but ignore program efficiency. I’d also have them sign a disclosure agreement to eliminate financial conflicts of interest from the start.

6. Learn the language PBMs speak fluent obfuscation. If I were starting today, I’d invest time up front to learn the key terms, definitions, and games. That knowledge builds leverage. And leverage is what gives you control.

I’ve made just about every mistake there is. But what helped me course-correct, and what helps our clients today, is a commitment to clarity. No jargon. No smoke. Just alignment.

If you’re stepping into pharmacy benefits for the first time, don’t try to master everything at once. Start with understanding how your PBM gets paid, where you do or don’t have control, and who’s looking out for your members.

That’s where the real savings begin.

You don’t need to figure it all out alone. The CPBS program is a great place to start.

The Pharmacy Benefits Mastery Program™ is a self-paced training built for HR, finance, and benefits professionals who want to take control of pharmacy benefit decisions. It covers contracts, pricing models, clinical strategy, and fiduciary oversight in plain English. Organizations can also sponsor team members to build internal PBM expertise without relying on outside consultants.

Beyond technical knowledge, the Pharmacy Benefits Mastery Program helps professionals strengthen their personal brand as strategic thinkers who don’t just manage benefits, they lead them. It’s not just a certificate. It’s a signal that you’re ahead of the curve.

Patients Taking Newer Weight Loss Drugs Likely to Return to Their Original Weight Within 2 Years and other pharmacies bear the impact and other notes from around the interweb:

• Patients Taking Newer Weight Loss Drugs Likely to Return to Their Original Weight Within 2 Years, Study Says. A new analysis discovered that patients who stop using weight loss drugs like Wegovy and Mounjaro are likely to regain the total weight they had lost in less than two years. The review, conducted by the University of Oxford’s Biomedical Research Centre, sought to measure weight gain after stopping the use of weight loss medication, or GLP-1 receptor agonists. Researchers determined that ceasing older weight loss medications resulted in a return to original weight within one year — and less than two years for newer weight loss medications.

• Stuck in the Middle: Self-Funded Health Plans and Recent Challenges to State PBM Laws. In recent years, prescription drug prices have been top-of-mind for state legislators, who have responded by passing laws that seek to control that pricing in a variety of ways, including by regulating pharmacy benefit managers (PBMs). While states are permitted to regulate fully insured products offered in their state, including mandating the benefits that insurers must offer, the Employee Retirement Income Security Act of 1974, as amended (ERISA) preempts state laws that impermissibly relate to self-funded employer-sponsored health plans that are subject to ERISA.

• The Uneven Landscape of Prescription Coverage and Restrictions Across U.S. Insurance. Medicaid, often viewed as a safety net, covers the broadest share of prescribed drugs but imposes more restrictions than any other insurance type. Medicare, by contrast, covers the least drugs while restricting access for nearly half of the drugs that are covered. Commercial insurance, typically employer-sponsored or purchased individually, falls in the middle in terms of drug coverage but has the fewest coverage limitations, like prior authorization, quantity limits, and step therapy.

• Costs of Extending the Small Molecule Exemption Period in Medicare Drug Price Negotiation. The Inflation Reduction Act (IRA) of 2022 empowered Medicare to negotiate prices for certain prescription drugs with high levels of Medicare spending. However, prices for new drugs cannot be negotiated immediately after Food and Drug Administration approval due a statutory waiting period. For small molecule drugs (chemical compounds that are usually pills, e.g. empagliflozin [Jardiance]), prices are negotiated at year 7 and take effect 9 years after FDA approval. For biologics (derived from a living organism or its cells and that are usually injections, e.g. insulin), negotiation occurs starting after 11 years, and the negotiated prices take effect at year 13.

Why TransparentRx Is Your Trusted Partner for Smarter Pharmacy Benefits

At TransparentRx, we specialize in delivering fiduciary pharmacy benefit management services that prioritize transparency, cost containment, and optimal patient outcomes. Our unique approach helps self-funded employers, benefits consultants, and health plan sponsors navigate the complexities of pharmacy benefits while reducing costs and enhancing care.

If you’re ready to take control of your pharmacy benefit strategy and eliminate hidden fees, contact TransparentRx today for a consultation. Let us help you achieve smarter, more effective benefits management.

Pharmacy Benefit Managers (PBMs) often use clinical programs like Generic Dispensing Rate (GDR) and Specialty Dispensing Rate (SDR) to influence employer drug spend, but not always in your favor. In this episode of Unlocking the Secrets of PBMs: Strategies to Navigate Their Profit Tactics, I break down how these metrics can be quietly manipulated to boost PBM profit at the expense of plan sponsors.

You’ll learn:

• What GDR and SDR actually measure
• How PBMs use them to appear clinically focused while protecting revenue
• Warning signs your PBM might be misusing these benchmarks
• Actionable strategies to regain control and align these metrics with a fiduciary standard of care

If you’re an HR leader, CFO, benefits consultant, or self-funded employer looking to cut pharmacy costs without sacrificing outcomes, this video is a must-watch.

As Rite Aid collapses, customers and other pharmacies bear the impact and other notes from around the interweb:

• As Rite Aid collapses, customers and other pharmacies bear the impact. Rite Aid has sold the pharmacy services of most of its stores across the United States to several rivals. The bankrupt company announced the fire sale Thursday, with CVS Pharmacy, Walgreens, Albertsons and Kroger scooping up Rite Aid’s pharmacy services at more than 1,000 locations. CVS Pharmacy was the biggest buyer, snapping up the prescription files of more than 600 Rite Aid stores spanning 15 states and agreeing to buy 64 Rite Aid locations in Idaho, Oregon, and Washington. The transactions still must be approved by the relevant bankruptcy court. As Rite Aid navigates the Chapter 11 bankruptcy process, the company said its stores remain open and customers can continue to use their pharmacy services “without interruption.”

• Stuck in the Middle: Self-Funded Health Plans and Recent Challenges to State PBM Laws. In recent years, prescription drug prices have been top-of-mind for state legislators, who have responded by passing laws that seek to control that pricing in a variety of ways, including by regulating pharmacy benefit managers (PBMs). While states are permitted to regulate fully insured products offered in their state, including mandating the benefits that insurers must offer, the Employee Retirement Income Security Act of 1974, as amended (ERISA) preempts state laws that impermissibly relate to self-funded employer-sponsored health plans that are subject to ERISA.

• The Uneven Landscape of Prescription Coverage and Restrictions Across U.S. Insurance. Medicaid, often viewed as a safety net, covers the broadest share of prescribed drugs but imposes more restrictions than any other insurance type. Medicare, by contrast, covers the least drugs while restricting access for nearly half of the drugs that are covered. Commercial insurance, typically employer-sponsored or purchased individually, falls in the middle in terms of drug coverage but has the fewest coverage limitations, like prior authorization, quantity limits, and step therapy.

• Costs of Extending the Small Molecule Exemption Period in Medicare Drug Price Negotiation. The Inflation Reduction Act (IRA) of 2022 empowered Medicare to negotiate prices for certain prescription drugs with high levels of Medicare spending. However, prices for new drugs cannot be negotiated immediately after Food and Drug Administration approval due a statutory waiting period. For small molecule drugs (chemical compounds that are usually pills, e.g. empagliflozin [Jardiance]), prices are negotiated at year 7 and take effect 9 years after FDA approval. For biologics (derived from a living organism or its cells and that are usually injections, e.g. insulin), negotiation occurs starting after 11 years, and the negotiated prices take effect at year 13.

Why TransparentRx Is Your Trusted Partner for Smarter Pharmacy Benefits

At TransparentRx, we specialize in delivering fiduciary pharmacy benefit management services that prioritize transparency, cost containment, and optimal patient outcomes. Our unique approach helps self-funded employers, benefits consultants, and health plan sponsors navigate the complexities of pharmacy benefits while reducing costs and enhancing care.

If you’re ready to take control of your pharmacy benefit strategy and eliminate hidden fees, contact TransparentRx today for a consultation. Let us help you achieve smarter, more effective benefits management.

GLP-1 drugs like Wegovy and Zepbound have exploded in popularity for both weight loss and type 2 diabetes. They work, but they’re expensive, often exceeding $1,000 per member per month. Left unchecked, GLP-1 costs will crush your pharmacy spend and drive up health plan premiums, stop-loss rates, and employee contributions. Figure 1 models the budgetary impact of adding Zepbound to the formulary of a self-funded employer with 1224 members. Here’s how HR and Finance Leaders can take control of soaring GLP-1 drug costs.

1. Don’t Rely on PBMs to Manage the Problem

Many PBMs profit when your drug costs go up through spread pricing, rebate retention, and inflated dispensing fees. GLP-1s have become one of their biggest profit centers. If your PBM’s strategy to manage GLP-1s is vague or nonexistent, that is a problem.

Recommendation: Review your PBM contract. Make sure you have access to claims-level rebate data, no spreads, and full visibility into how GLP-1s are covered, reimbursed, and dispensed.

2. Establish Clear Clinical Criteria for Coverage

Approving GLP-1s for every employee who requests them is not financially sustainable. But denying coverage entirely can create backlash and retention issues.

Recommendation: Require prior authorization based on:

• Confirmed diagnosis of type 2 diabetes or BMI ≥30 (or ≥27 with comorbidities)
• Failure of first line therapy (i.e. Metformin) with diagnosis of type 2 diabetes
• Documented history of lifestyle intervention
• Quarterly clinical review to assess improvement (weight loss or A1C)
• Discontinuation if there is no measurable improvement after 6 months

3. Move GLP-1s to the Pharmacy Benefit

Many GLP-1s administered in a clinical setting are billed under the medical benefit, where visibility and control are limited. Rebate capture is also more difficult.

Recommendation: Shift GLP-1 claims from the medical to the pharmacy benefit when possible. This improves formulary control, rebate access, and member-level tracking.

4. Use Tiered Coverage and a Narrow Formulary

Covering every GLP-1 is a waste of dollars. Employers need to focus coverage on the most effective and cost-efficient options.

Recommendation: Work with a fiduciary PBM to build a narrow GLP-1 formulary. Cover one or two preferred options. Require step therapy or exclude others entirely.

5. Explore Alternative Procurement Channels

Some employers are saving thousands per script by sourcing GLP-1s from international mail-order providers.

Recommendation: Evaluate alternate sourcing strategies, especially for weight-loss-only use. Savings can range from 40 to 60 percent per fill.

6. Tie Coverage to Lifestyle Support Programs

Drugs alone won’t solve obesity. Employers should require members to participate in lifestyle or obesity coaching programs as part of their GLP-1 coverage.

Recommendation: Bundle GLP-1 coverage with a medication therapy management (MTM), digital or onsite wellness program. Require active participation for continued access.

Bottom Line

GLP-1s deliver clinical value, but they can quickly become a budget buster if left unmanaged. Self-funded employers cannot afford to be passive. With the right guardrails, procurement strategy, and clinical oversight, you can offer meaningful access while keeping spend in check. If you’re ready to tackle your GLP-1 costs head-on, let’s connect.

Elevate your expertise in pharmacy benefits management with the Certified Pharmacy Benefits Specialist® (CPBS) program, sponsored by the UNC-Chapel Hill Eshelman School of Pharmacy. Whether you’re an HR leader, finance executive, consultant, or pharmacist, this certification provides the in-depth knowledge and strategic insight needed to manage pharmacy benefits with confidence and cost efficiency. Gain up to twenty continuing education credits, enhance your career prospects, and help your organization take control of pharmacy spend. Register today to join a growing network of professionals shaping the future of pharmacy benefits management. Learn more at the Pharmacy Benefit Institute of America.

“If you don’t know how your PBM gets paid, you’re probably overpaying.” That’s not scare tactics, it’s a fiduciary truth. For CFOs, CHROs, benefits consultants, and self-funded employers, understanding how a pharmacy benefit manager (PBM) earns revenue is the difference between managing costs and subsidizing someone else’s margin.

PBM Profits Often Come From Plan Overspending

Most PBMs profit through spread pricing and other opaque tactics. They earn revenue from the gap between what your plan pays and what the pharmacy receives, along with a mix of back-end cash flows like rebates, DIR fees, and clawbacks. These streams are often subsidized by inefficient benefit design and weak clinical oversight. The issue? These profits are usually hidden, buried in complex financial models and disguised as standard industry practice.

Here’s how you should be modeling PBM earnings:

Earnings After Cash Disbursement Formula

EACD = AF + DF + IC + MR – CD

Where:

• MR = Manufacturer Revenue
• IC = Ingredient Cost Reimbursement
• DF = Dispensing Fees *(includes traditional dispensing fees and DIR fees)
• AF = Administrative Fees
• CD = Cash Disbursement to pharmacies and rebate payouts to plan sponsors

Note: In this formula, DF (Dispensing Fees) is a composite of:

• Dispensing Fees paid or retained
• DIR Fees (Direct and Indirect Remuneration) collected from pharmacies

DIR and DF Are Your Plan’s Money

When PBMs withhold or clawback fees from pharmacies (whether labeled as DIR, performance penalties, or admin charges) they’re using your plan’s volume and activity to generate income. If these funds aren’t transparently passed back or accounted for, they become undisclosed profit. In fiduciary terms, that’s plan leakage.

Why PBM Earnings Matter

If your PBM’s compensation is opaque, you’re at risk for:

• Overpaying for drugs, even when rates look competitive
• Losing plan assets to undisclosed spread, clawbacks, or retained fees
• Incentive misalignment that drives up utilization or keeps higher-cost drugs on formulary

In contrast, when a PBM provides clear, formula-based earnings disclosures, you can:

• Benchmark fees against fiduciary standards
• Demand rebate and DIR transparency
• Eliminate conflicts of interest

Fiduciary Oversight Starts with Financial Clarity

If your PBM resists disclosing their earnings using a formula like the one above, that’s a red flag. You can’t control what you can’t see, and in pharmacy benefits, visibility is leverage. Bottom line, you’re not just managing a benefit, you’re managing a financial asset. Know how your PBM earns their money, and you’ll protect more of yours.

Elevate your expertise in pharmacy benefits management with the Certified Pharmacy Benefits Specialist® (CPBS) program, sponsored by the UNC-Chapel Hill Eshelman School of Pharmacy. Whether you’re an HR leader, finance executive, consultant, or pharmacist, this certification provides the in-depth knowledge and strategic insight needed to manage pharmacy benefits with confidence and cost efficiency. Gain up to twenty continuing education credits, enhance your career prospects, and help your organization take control of pharmacy spend. Register today to join a growing network of professionals shaping the future of pharmacy benefits management. Learn more at the Pharmacy Benefit Institute of America.