When I started teaching pharmacy benefits, I assumed most people in HR, finance, and brokerage had a decent grasp of PBMs. Ten years in, I know better. What I see over and over is smart professionals trying to manage a multi-million dollar line item with incomplete information, opaque contracts, and vendors who are highly motivated to keep it that way.

Here are five hard lessons those ten years have driven home.

1) Most smart people don’t know what they don’t know about PBMs

I routinely teach people with 10, 15, even 20 plus years in benefits. Many walk into the first session thinking PBMs are just another vendor to benchmark on admin fees and rebates. By week two or three, the comments shift to some version of: “How have I managed pharmacy benefits this long without seeing any of this?”

The lesson: PBM literacy is far lower than most leaders realize. That is not an insult, it is a reality of an industry built on complexity and jargon. Until HR, finance, and advisors acknowledge that gap, they cannot close it. Once they see the full model, they stop treating pharmacy as a sidecar to medical and start managing it as a financial and clinical asset that deserves board-level attention.

2) The revenue model is the story, not the marketing

Every glossy PBM deck promises “lowest cost” and “industry leading rebates.” After teaching hundreds of students how the money actually moves through the system, I have yet to see a flashy rebate slide, for instance, that mattered more than the revenue model underneath it.

What changes behavior is understanding where the PBM actually gets paid: spread, retained rebates, manufacturer fees, network differentials, data monetization, and a stack of “miscellaneous” charges that are anything but. Once learners map those cash flows against their own claims data, they stop asking “What is your AWP discount?” and start asking “Show me every dollar you touch, keep, or re-route, and put that in the contract.”

The Lesson: if you cannot clearly and accurately explain your PBM’s revenue model to your CFO in one page, you are not operating at a fiduciary standard of care.

3) Contract language is a financial strategy, not legal cleanup

In almost every cohort, there is a moment when someone realizes their PBM contract is basically a revenue permission slip written in the PBM’s favor. Definitions are vague. Audit rights are weak. Ownership of data is unclear. “Guarantees” are riddled with carve-outs.

Over ten years teaching pharmacy benefits, I have learned that contracts are not a legal formality you hand to outside counsel at the eleventh hour. They are a primary cost containment tool. When HR, finance, and advisors learn how to specify fiduciary duties, define “lowest net cost,” lock in data rights, and eliminate gag clauses and side deals, the financial results change.

The lesson: leaders who treat PBM contracting as a strategic discipline, not a box to check, consistently get better pricing, better transparency, and cleaner audit trails. Leaders who do not, subsidize somebody else’s margin.

4) Plan design and clinical strategy beat rebate chasing every time

Most employers have been trained to chase rebates, copay cards, and “savings programs” while ignoring the engine that drives long-term cost: plan design paired with clinical strategy.

Ten years of case studies have shown me the same pattern. The plans that win:

• Use formulary management to move members to effective, lower-net-cost therapies, not just to maximize rebates.
• Align site-of-care and specialty strategies so J-code and specialty drugs are managed where utilization controls actually work.
• Build cost sharing and utilization management rules that steer behavior instead of just shifting cost.

The lesson: HR and finance teams have far more control than they think, but it lives in plan rules and clinical policy, not in the renewal glossies. A fiduciary approach asks, “Does this design produce the lowest sustainable net cost and acceptable outcomes?” instead of “How big is the rebate check?”

5) Education is not a perk; it is a fiduciary duty

I used to think education was a nice value-add. A way to differentiate. After a decade of teaching, I see it differently. Education is infrastructure.

When an employer or consulting firm invests in real pharmacy benefits education, you can see the shift:

• Their RFPs stop asking generic questions and start demanding specific disclosures and data files.
• Their internal committees ask sharper questions, especially about specialty spend and vendor conflicts.
• Their leaders document decisions and oversight in a way that would make any regulator, auditor, or plan member more comfortable.

The lesson: Staying uninformed about a multi-million-dollar drug plan is a choice that benefits someone else. A fiduciary standard requires you to understand the system, not rely on the PBM’s scoreboard.

Closing thought

Companies assume everyone has the same information, but knowing the right information and acting on it are very different. You gain advantage by analyzing the right information, understanding its impact, and executing a plan you can actually deliver.

After ten years of teaching pharmacy benefits, access to data or vendor promises does not drive the real differentiator. It’s the willingness to understand the system, apply fiduciary discipline, and make decisions that move the plan forward.

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