Employers today are no longer accepting a market check that simply confirms the incumbent pharmacy benefit manager (PBM's) numbers look reasonable. They're asking sharper questions: why can't we compare these proposals side by side, why does one PBM's discount guarantee mean something different from another's, and why does "competitive" pricing keep failing to show up as lower total spend? Pharmacy consultants are the ones fielding those questions, and the traditional market check format wasn't built to answer them.

For consultants, the market check remains one of the most useful tools they can use between full procurement cycles. It moves faster than an RFP and it works within the leverage a consultant already has. Yet the standard it was built against, discount and rebate percentages measured against a PBM-supplied benchmark, is exactly why employers have stopped trusting them at face value. Even PBMs marketing themselves as "next-generation" are quietly retiring the component-level guarantees and multi-list definitions that made a traditional market check easy to frame favorably. A market check that hasn't updated its own standards is measuring a version of the contract the market has already evolved past.

Where the Traditional Market Check Format Falls Short

Market checks were historically very useful for comparing a client’s current contracted pricing against market conditions at a more manageable scale than a full RFP. The market check’s ubiquity was well deserved: it can surface contract terms that have drifted from current market pricing, it can capture additional discounts and rebates without the disruption of a full procurement cycle, and it moves faster than an RFP.

None of that is in question. What's changed is what a benchmark comparison can actually prove. When every PBM defines brand, generic, specialty, and MAC list scope differently, a side-by-side of discount percentages measures whose spreadsheet looks best, but not necessarily whose plan pays less. Employers, armed with more information and visibility than ever before, have picked up on that gap faster than the market check format has adjusted to it.

The Blind Spots of a Traditional Market Check

A market check is only as objective as the inputs behind it. Four areas determine whether the exercise finds real savings or reproduces the same opaque numbers in a new format.

Benchmark

The benchmark is the foundation of the entire market check, and it deserves scrutiny before any comparison begins. A consultant should ask what data determined it: Is it based on the broad market, the PBM's own book of business, a specific segment of that book, or a cohort the PBM selected? 

A benchmark built from the PBM's own client base, or from a favorable subset of it, can validate the PBM's existing pricing rather than testing it against the wider market. The PBM running or supplying the benchmark should be able to go beyond showing the final numbers and provide the underlying methodology.

Timeline

A market check has to happen on a schedule that lets the plan actually capture identified savings, whether through a contract amendment or at the next renewal. A market check that runs too early in the contract term, or too close to a renewal deadline to act on, can produce findings the plan cannot use. A consultant should confirm the timeline serves the plan's renewal calendar.

Pricing Definitions

Pricing definitions determine what a discount or rebate guarantee actually pays out, and small differences in definition can produce large differences in plan cost. A consultant reviewing pricing definitions in a market check or contract should look for:

• Drug Classification: Confirm how the contract classifies a drug as brand or generic, and whether a claim gets billed under one classification but reconciled under another. Reconciling a claim under the generic classification after billing it as a brand can inflate the reported performance against price guarantees.

• Specialty Tier Restrictions: Check which drugs the specialty tier definition actually includes, since a narrow specialty list changes which claims receive specialty pricing and rebate treatment.

• Maximum Allowable Cost (MAC) List Scope: A MAC rate quoted aggressively in a proposal can apply to a narrow list of drugs in practice, so the effective savings are smaller than the headline rate suggests.

• Exclusions: Confirm whether the contract excludes certain specialty drugs, or the lowest-cost biosimilars, from the financial guarantees. An exclusion removes high-cost or high-volume claims from the calculation used to prove the guarantee is being met.

Rebate and Discount Guarantees

Most market checks assume the PBM is working to maximize rebate and discount guarantees on the plan's behalf. But a rebate guarantee, by definition, rewards the PBM for capturing rebate dollars, and rebates are typically larger on higher-list-price drugs. 

A PBM chasing a rebate or discount guarantee has an incentive to place higher-cost brand drugs on the formulary when a lower-net-cost alternative exists, because the rebate guarantee measures rebate capture instead of total plan spend. A market check that only confirms the PBM met its rebate percentage does not confirm the plan paid the lowest net cost for its drug mix.

Fiduciary Duty: Contracting to Support Savings

Under ERISA, plan sponsors that select and oversee their PBM are fiduciaries, with a legal duty to act in the best interest of the plan and its members. The consultant advising that plan sponsor can help ensure fiduciary protection is built into the contract itself, ahead of the next market check, in three ways:

1. Seek the lowest net cost, not the highest discount. A larger headline discount or rebate percentage does not guarantee lower total plan spend once formulary placement, MAC list scope, and exclusions are factored in. Structure contract language and future benchmarks around total net cost per claim as opposed to maximizing individual discount or rebate percentages.

2. Identify exclusions in the contract before signing. List every drug class, specialty category, or biosimilar carved out of the financial guarantees, and confirm the plan sponsor understands what those exclusions mean for the guarantee's real coverage.

3. Clarify and align on definitions. Pin down how the contract defines brand, generic, specialty, and MAC list scope in writing, so a future market check compares like terms instead of variable definitions the PBM can interpret differently at renewal.

Seek Out a True Partnership

Market checks don’t need to be adversarial negotiations between the plan sponsor and the incumbent PBM. At SmithRx, we treat market reviews as a transparent, collaborative process designed to keep a plan aligned with true market pricing. We see ourselves as a partner on the same side as plans and consultants.

It all starts with the data. A plan's claims and contract data does not become SmithRx's proprietary or confidential information simply because it passes through our systems. Clients and their consultants have full visibility and on-demand access to their data down to the claim level. Because our compensation comes from a single, flat per-member-per-month (PMPM) administrative fee rather than from spread or retained rebates, we have no reason to withhold pricing detail from a market check.

It extends to how we handle pricing over the life of a contract. We pass through all improvements in the supply chain to clients as they happen, rather than holding those gains as spread against a fixed guarantee. Other PBM models that manage pricing to a guarantee can retain supply chain improvements as margin instead of passing them to the plan. A market check against a PBM built this way tests whether current pricing reflects the market; it does not need to uncover what the PBM has been keeping from the plan sponsor in the meantime.

For a market check to be truly useful, it must track against industry benchmarks, fair definitions, and market costs, on the timeline determined by the client and their trusted advisors. It’s a step in rooting out misaligned incentives and identifying sustainable partners.

A market check is a useful tool for testing PBM pricing between full procurement cycles, but it is only as thorough as the benchmark, timeline, and definitions behind it. Consultants who press on those specifics, rather than accepting the incumbent's framing, put their clients in a stronger position heading into contract negotiations. 

Frequently Asked Questions

How is a market check different from a full RFP?

A market check works within the existing PBM contract to test and renegotiate specific pricing terms, while an RFP solicits competing proposals from multiple PBMs and can result in switching vendors. A market check is faster to run but only tests the incumbent's numbers, while an RFP tests the market directly.

Can a market check show improved discounts without lowering total plan cost?

Yes, when the benchmark or guarantee measures discount or rebate percentage rather than net cost per claim. A PBM can meet a rebate guarantee while total plan spend rises if higher-rebate, higher-cost drugs are favored on the formulary.

What should a market check evaluate beyond the benchmark percentage?

A thorough market check should also confirm the benchmark's underlying data source, the pricing definitions for brand, generic, and specialty drugs, the scope of any MAC list or exclusions, and the timeline for capturing identified savings. Reviewing the benchmark percentage alone can miss where the real cost differences originate.