The 5 Pillars of a Modern PBM

Pharmacy benefit managers (PBMs) were created for the purpose of navigating an increasingly complex pharmacy supply chain and working with manufacturers, insurers, and pharmacies to get the best deals for plan sponsors. Instead of following through with that promise, legacy PBMs have instead manipulated the system for their own interests. Employers face needless complexity, opacity at every turn, and terms that are fundamentally misaligned with the maximum savings they were promised. 

Fortunately, this isn’t the only option for plan sponsors. New, forward-thinking PBMs have emerged with radically different focuses that align their interests with those of employers, members, and each stakeholder in the pharmacy ecosystem.

SmithRx’s Vice President of Marketing, Vidya Drego, recently sat down with the Millennium Alliance podcast to pull the curtain back on a new class of modern PBMs and the dependable, straightforward, open-book savings they offer.

Keep reading, or listen to the full podcast below, to discover what the pillars of a modern PBM are and the effect they have on the pharmacy benefits experience. 

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Aligned 

The term “fiduciary alignment” was coined under the Employee Retirement Income Security Act (ERISA) as the legal obligation plan sponsors have to act in the best interests of their health plan and its members. For legacy PBMs, this obligation to also practice fiduciary alignment with their clients has gotten muddied over time. 

By contrast, a truly aligned PBM, like SmithRx, operates on a simple, flat-fee model, ensuring their success is directly tied to a client's savings, not the cost of drugs. We steer members towards the most appropriate and cost-effective therapies—not the most profitable ones. Modern PBMs operate as a true partner, not a gatekeeper. In practice, this means helping HR teams simplify benefit delivery and reduce administrative burden.

(Legacy PBMs) are in it for their bottom line and not the best interests of their clients. And this is where we're different. You as a plan sponsor can rest easy knowing that (we’re) helping you uphold your legal responsibility by doing right by your employees and not working against you. - Vidya Drego, Vice President of Marketing, SmithRx.

Transparent

Many legacy PBMs claim to be transparent, but true transparency goes beyond a marketing slogan. It means an employer can see exactly how their money is spent, get easy access to live data on claims, drug costs, what was paid to the pharmacy, and rebates.

Legacy PBMs bury the very data employers need to make informed decisions: actual drug costs, rebate mechanics, pricing formulas, and who really profits from each transaction. SmithRx, on the other hand, has baked transparency into the core of our operations. We don’t profit from obfuscation, so we have no reason to hide the data. SmithRx delivers transparency by providing 100% access and visibility to your data, all the way down to the claim level.

You as the client should be able to see how and where your money flows first and foremost. We do more than just showing it to our clients, we take the extra step of making it easily accessible.

Executional

All PBMs, both legacy and modern, claim to help lower drug costs—and they may even have data to prove they’ve spotted opportunities for savings. If they’re leaving the grunt work to the employer, the prescriber, or members to capture these opportunities, then it’s likely savings are being left on the table and the system keeps paying more than it should.

Modern PBMs, like SmithRx, have models designed for action. We take accountability for moving every savings opportunity across the finish line. We achieve this by leveraging strategies like our Connect 360 programs, which are created to reduce medication costs and ensure members get their medications with minimal to no co-payment. 

For example, SmithRx became the first-ever PBM to offer a Humira biosimilar, Yusimry. With our Connect 360 program, over 80% of our clients moved to this biosimilar and they saw 90% savings on autoimmune spend just in that first year. In subsequent years, we introduced a Stelara biosimilar with similarly impressive savings across these high-cost drug segments.

We’re not just saying we generally support biosimilars. We support the lowest cost biosimilar and we've actively helped our clients move to it—and that means savings in hand.

Simple 

One of the main problems with legacy PBMs is that they overcomplicate their processes—and this leads to long wait times, opaque approvals, confusing language, and a general lack of accountability between vendors. HR teams are used to these systems and the headaches they bring by way of constant open support tickets, member complaints, and chasing down answers. It does not have to be like this for employers or members.

By contrast, modern PBMs are built on a foundation of simplicity. At SmithRx we achieve this by removing friction from the PBM experience with simpler processes, fewer gaps, and a system that addresses issues before they even escalate. 

From the ground up, we’ve structured our business with this simplicity in mind. Employers can rest easy knowing that we answer calls within seconds, have intuitive support, and practice real accountability in our operations. Issues and prior authorizations are resolved in a timely, clean-cut manner.

Consistent

With a legacy PBM, the experience you get is incredibly variable. This is because their model is predicated on frequent dealings with external parties, complex contracts, and white-labeling. Legacy PBMs don’t give a fair, consistent experience to all clients. Instead, certain clients will receive preferential treatment and pricing, with other employer groups paying the price. This inconsistency also extends to the member experience. There is no continuity and no accountability when it ultimately fails them. 

A modern PBM takes a radically different approach: bring operations fully in-house so that every aspect of the client and member experience is in their control. This ensures excellence in every single part of the pharmacy benefits process. At SmithRx this means we: directly manage our pharmacy network, adjudicate claims internally, own all service, support, and clinical programs, and can ensure every single client gets the same standard of care and execution—always.

Where legacy PBMs are complex and opaque, we are simple and open. We optimize for the lowest net cost drugs and we charge only a per-member, per-month admin fee for doing that. That's a really simple but powerful concept.

The future of modern PBMs has a clear vision: provide true savings through fiduciary alignment, transparency, best-value execution, consistency, and simplicity. This future is made not just for a few, mega-corporations—it’s designed to benefit members, employers, pharmacies, and PBMs alike.

Want to learn more about the pillars of a modern PBM? Listen to Vidya’s full episode on the Millennium Alliance here—or chat with our team of pharmacy benefits experts to discover your possibilities with a modern PBM.