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.

(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.

A modern PBM provides this information without hidden fees or complicated contracts, empowering clients with full visibility and auditability. 

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

It’s one thing for a PBM to find potential savings for clients—but those findings are useless if they’re not made accessible or actionable. A PBM needs to capture these savings and deliver the lowest net price in real time to drive value for your plan.

At SmithRx, we leverage progressive strategies to ensure we find, and capture, the lowest net price for our clients. One method for achieving this is through our adoption of clinically-informed biosimilar use. We’re able to deliver the medications patients need to stay healthy, while delivering very impactful savings for both employers and members. 

In 2023, we became the first-ever PBM to offer a Humira biosimilar, Yusimry. Over 90% of our clients moved to this biosimilar and the impact was incredible—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 they do this to obscure the truth from plan sponsors. PBMs can be profitable businesses without the use of complex contracts and opaque practices. Pharmacy benefits can and should be very straightforward for both employers and members.

Modern PBMs are built on a foundation of simplicity. 

For employers, we offer straightforward reports, 100% access to data, and the support you need to understand this data and make informed plan decisions. At SmithRx, we have a dedicated team of account managers who are experts in all things PBM. Thanks to our simple, easy-to-understand PMPM fee structure, their job isn’t to make money off of clients, it’s to provide an excellent level of service that translates into more money saved for your plan. 

For members, modern PBMs are designed to deliver a frictionless experience that gets them the medications they truly need. At SmithRx, we’ve structured our business with the hope that a member will have such a seamless experience, they’ll never need assistance. For members with more complex medical needs, we take a proactive, people-first approach to support. Our aim is to have all their needs met and issues resolved within one single call. This is in direct contrast to the legacy PBM experience, where chasing down reps and long hold times are commonplace. 

Consistent

Under the legacy PBM model, clients of a singular PBM could have contracts that have more differences than similarities—and it’s not to the benefit of the employer. Modern PBMs provide a consistent, transparent model for everyone. 

By running all operations in-house and leveraging technology to scale, they can offer the same, exceptional pricing and support to every client, regardless of size. This is a "one-to-many" approach, where the value of a lower-cost medication is shared across the entire client base, not just to one VIP client. This model is made possible by the way modern PBMs make money. Rather than relying on profit from spread pricing, modern PBMs like SmithRx remain profitable by charging a simple, consistent per-member, per-month administrative fee.

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.