How SmithRx's Drug Pathways Engine Drives Savings

We have one mission here at SmithRx: driving down our clients' cost of medicine while providing an exceptional level of care to members. 

To understand how we save clients more money and deliver a better experience for members, it’s helpful to understand what makes us different from traditional pharmacy benefit managers (PBMs). The legacy PBM model is built on promising discounts and rebates—and this methodology is fundamentally flawed. Their opaque system incentivizes the use of higher-cost drugs with “bigger” savings, which ultimately creates a cycle of inflated prices and questionable value. 

The future of PBMs is a fiduciary-aligned, cost-based model that serves clients and members, not PBM’s own interests exclusively. At SmithRx, we’re proud to be a part of that future. Instead of focusing on discounts, we manage the actual cost of the claim from the outset. This involves transparency, prioritizing clinically appropriate and affordable medications, and aligning our goals directly with yours. 

This marks the first piece in my new series, the SmithRx Quarterly PMPM by MTA Recap, where I'll dive into the real savings our approach is delivering for clients. Read on to get an analysis of our Q2 2025 results and explore how our Drug Pathways Engine is driving down costs in key Manageable Therapeutic Areas (MTAs).

Our Drug Pathways Engine’s Impact Across Manageable Therapeutic Areas

How do we save more for employers and members? Our collective strategy for bringing the best value to clients comes from assisting members through our Drug Pathways. Our Drug Pathways Engine (DPE) works by identifying and then capitalizing on opportunities to lower drug costs. While this impact extends to every single SmithRx member, it can be helpful to zoom out and measure these savings across Manageable Therapeutic Areas (MTAs).

MTAs are groupings of different indications, or disease states, that have the most drug pathway opportunities.  For example, we look at all autoimmune treatments together as an MTA rather than analyzing this data on a medication by medication basis. With SmithRx, we allow 100% visibility into your data—but we also present it in a digestible way that allows you to make informed business decisions on the fly.

The Big Picture: Q2 2025 Results

Before we dive into the savings we were able to deliver to our clients and members, it’s helpful to understand just how differently we approach pricing here at SmithRx. Legacy PBMs may appear to offer deep discounts and generous rebates, but their vertically integrated business model and misleading practices like spread pricing and rebate retention often obscure the true cost of drugs, leading to higher overall expenses for a plan.

At SmithRx, we operate on a transparent, pass-through model with no hidden markups or retained rebates. The way we remain profitable is clear. We charge a flat fee and then focus on optimizing for the lowest net cost—using tools like our Drug Pathways Engine.

So, what was our DPE able to achieve in Q2 2025 for our clients? 

• Costs Pre-Savings: Before implementing SmithRx, our clients were spending $126.40 per-member, per-month across all areas. 

• Costs Post-Savings: After leveraging our DPE, clients’ per-member, per-month spend was reduced to $88.50 on average.

• Total Percent Saved: Our clients saved 30% across all MTAs thanks to our Drug Pathway Engine.

• Total Dollars Saved: Across all Manageable Therapeutic Areas, we delivered average savings of $37.60 per-member, per-month in Q2 2025.

These savings are direct results of SmithRx’s unique approach to bringing the best net value to clients. By leading with transparency, passing through 100% of rebates, and leveraging our clinical expertise we’re able to deliver exceptional value to our clients and members. 

Key Insights from Manageable Therapeutic Areas

If you’ve ever been responsible for your business’ or a client’s pharmacy benefits plan, it’s likely you’ve seen firsthand how some Manageable Therapeutic Areas, or specific drug categories, can drive up costs significantly. By understanding these distinct areas and their associated spend, you can make more informed decisions and leverage different strategies to make spend more manageable—while still delivering a great member experience.

Let’s explore some of today’s hot topic MTAs and what we’re doing at SmithRx to ensure our clients aren’t overspending. 

Autoimmune:

In recent years there have been incredible advances in treating autoimmune diseases. If you were to search up news about these medications even now, you’d likely see a stream of articles about new to market drugs, clinical trials, and promising research all aimed at treating a whole host of autoimmune conditions. When doctors prescribe these new medications, it unfortunately means that your monthly spend per-member can skyrocket.

At Smith, we tackle these rising costs head on by our innovative, clinically-informed use of biosimilar alternatives. What’s more, we anticipate that costs will continue to be driven down later in 2025 due to increased pricing pressures.

Diabetes:

GLP-1s are probably the hottest topic in pharmaceuticals today. This category of drug, which encompasses semaglutide and tirzepatide medications, were originally cleared by the FDA to treat type 2 diabetes. These trending drugs are notoriously expensive, with the cost ranging between $700-$1000 a month before insurance kicks in, and yet they remain incredibly sought-after. 43% of adults in the United States with diabetes have reported using a GLP-1 for treatment.

Covering GLP-1s can be incredibly expensive for both employers and members, but we’ve been able to implement strategies to keep these medications accessible for the folks who need them most. While industry costs per-member, per-month (PMPM) continue to rise, our clients’ net costs in this category are remaining affordable due to our Drug Pathways Engine, ensuring appropriate, clinically-based use, and our 100% rebate pass-through policy. This means we’re able to get the folks their GLP-1s at less than $400 a month on average.

Other Generics: 

Generic medications are a popular alternative to costly brand-name drugs that have helped self-funded employers limit costs. There are several factors that are continuing to drive down the costs for generic drugs:

• As patents expire, there are more opportunities for alternatives to come to market for high-cost drugs.

• Competition among the drug manufacturers drives new drug, generic, and biosimilar development, which “crowds” the space and causes prices to fall.

• Generics simply aren’t as resource intensive to get on the market as they don’t require the same R&D investments and don’t need to repeat the extensive clinical trials that brand-name manufacturers do to get FDA clearance.

From the start, generics present a great opportunity for delivering value. We take this a step further by the way we structure our network of partners at SmithRx. We’ve moved to a cost-based pharmacy network that allows for true deflation of ingredient costs as competition increases.

Weight Loss: 

Though GLP-1s were initially developed to manage diabetes, they’ve now been approved by the FDA for weight management—and are probably most famous for the incredible results they can deliver. One in every eight adults in the United States have reported taking a GLP-1 medication. That’s a staggering 12% of the total population who has tried this class of drugs.

There’s incredible demand for these medications to be used for weight management, but also monumental cost, just like with their use for diabetics. Over 90% of SmithRx’s employer clients currently exclude this as a category because of the high-cost, with net monthly costs surpassing those of diabetes use cases (around $500 a month). 

There is a light at the end of the tunnel. As more alternatives and even new triple and quad-agonists come to market, the list prices for GLP-1 drugs will come down. This innovation and growth in the space will enable us to deliver even more savings for our members.

SmithRx’s Commitment to Your Savings

Our commitment to a cost-based approach, powered by our Drug Pathways Engine, is successfully securing significant savings for our clients. By focusing on lowering costs within MTAs and providing unparalleled transparency, we’re able to deliver real, measurable value. 

Be on the lookout for our analysis of trends and costs across Manageable Therapeutic Areas on a quarterly basis in our series, SmithRx Quarterly PMPM by MTA Recap. If you're ready to experience a PBM that prioritizes your bottom line with a model built on transparency, we invite you to book a meeting with us today.