What is a PBM?
Understanding Pharmacy Benefit Managers: From Legacy Models to Modern Solutions
Pharmacy Benefit Managers: The Bridge Between Costs and Care
Pharmacy Benefit Managers (PBMs) help employers, health plans, and members manage the cost and access to prescription medications.
Create and supply prescription medications to treat health conditions.
Insurance providers that manage healthcare coverage, including prescription costs and access.
Dispense prescription medications to patients through retail, mail-order, or specialty services.
What PBMs Were Meant to Do—And What’s Changed
PBMs were created to lower drug costs and streamline prescription management. However, some legacy PBMs have shifted focus to profits over patients, introducing hidden fees, opaque pricing, and limited drug choices, leaving employers and members with rising costs and reduced access.
How Legacy PBMs Exploit the System
Legacy PBMs charge health plans more for a drug than they reimburse pharmacies, keeping the difference as revenue. This "spread" varies based on the drug, pharmacy, and contract terms.
Legacy PBMs retain a portion of manufacturer rebates instead of passing them to plan sponsors. This practice incentivizes PBMs to favor drugs with higher rebates, undermining cost savings.
Legacy PBMs expand control by acquiring insurers, pharmacies, or manufacturers. This leads to higher drug prices, limited consumer choices, and reduced pricing transparency.
Why Legacy PBMs Fall Short
Employers rarely see where their money goes.
Layers of fees make costs unpredictable.
Patients face restricted drug options and pharmacy networks.
How This Affects Employers and Members
Of patients report being required to use a PBM-preferred pharmacy. PBM steering practices restrict pharmacy choices, limiting access to preferred providers
FTC Report, 2023Of employers’ annual prescription drug spending is driven up by unmanaged PBM plans due to hidden fees and inefficiencies. These opaque charges add significant costs and complicate budgeting.
USI, 2022Patients state their PBM mandates the use of higher-cost medications, even when cheaper, equally effective alternatives are available, increasing out-of-pocket expenses.
KFF Health Tracking Poll, 2023Built on Values You Can Trust
At SmithRx, our approach to pharmacy benefits is guided by three core principles. With these values being at the heart of everything we do, we’re reimagining pharmacy benefits to ensure everyone benefits from a system built on trust and clarity.
Healthcare pricing should be clear. At SmithRx, we believe in full visibility, showing you every cost, every time. No surprises, no confusion—just straightforward, honest pricing.
All savings go directly to you. With no hidden fees or exceptions, our model ensures every discount is passed on transparently, so you always know where your dollars go.
We focus on delivering the lowest net prices. By offering options like generics and biosimilars, we give you the flexibility to choose cost-effective solutions without compromising care.
Elevate Your Expertise with Radical Transparency
