Jeff Malone
Pharmacy benefit management (PBM) has operated behind the scenes and somewhat in the dark for a long time. Slow reporting and opaque pricing obscured how decisions that affect cost and, most crucially patient care, are made. At the same time, specialty medications, increased utilization and clinical complexity are rapidly inflating pharmacy spend.
“The biggest disconnect is that pharmacy economics are driven more by pricing structure and rebate incentives than clinical value,” said Jeff Malone, president and CEO of RxPreferred Benefits. “As a result, drug costs generate greater financial returns within the supply chain, even when lower-cost options are available.”
However, change is afoot. Stakeholders increasingly expect more than months-old cost data. They demand transparent pharmacy strategies that improve outcomes and experiences that also deliver measurable savings.
“Healthcare doesn’t need more retrospective reports,” Malone added. “It needs real-time decision engines.”
New data-driven PBM models are disrupting the business. Instead of relying on delayed or backward-looking reporting, organizations can now access continuous monitoring and predictive analysis to empower real-time decision-making. Utilization patterns and potential risks can be spotted earlier, prompting intervention to help control pharmacy spend. Instead of reacting to cost increases after the fact, healthcare leaders now have technology at their fingertips that lets them develop pharmacy strategies before those costs go up.
“The key to this is actionability,” said RxPreferred’s Vice President, Enterprise Strategy, Meagan Williams. “Data triggers decisions and analytics tell us what levers to pull, so earlier access means better outcomes. Predictive insights support early and manageable decisions instead of late-stage reactions to something that happened three or four months earlier. You can get ahead of it and manage that spend.”
The bottom line is that these models provide the transparency and reliability that organizations need to weigh financial performance, clinical value and member experience, then use those insights to prioritize them and make fully informed choices.
Until recently, controlling pharmacy costs depended largely on tighter restrictions, formularies and utilization that could limit access for patients. Now, data-driven PBM models are moving beyond those narrow parameters. They utilize precise analytics and member-specific intervention strategies to identify clinically appropriate treatments that reduce costs but not access to care.
“Our goal when we switch members to different medications is to find the best alternative at the lowest price,” said Zac Hanson, vice president, growth at RxPreferred. “We also evaluate member decision-making and their overall experience, and often we see medical costs go down because we’re accessing lower cost drugs that were unavailable to them before, whether it be a generic alternative or sourcing from a lower cost pharmacy.”
Williams cites a recent example of how analytics and early intervention can reduce costs while maintaining, or even improving, quality of care.
“While working with one employer we identified a small cohort of members who received infused medications on the medical benefit,” she said. “However, we were able to partner with the provider, pharmacy and the member to transition them over to the pharmacy benefit, which saved the plan up to 40% on those high-cost therapies.”
Unaffordable medications can delay treatment or prevent it altogether, which drives higher levels of healthcare utilization later at higher costs. Data-driven tactics that find lower-cost alternatives, evaluate them, then connect members to more cost-effective options can improve adherence and reduce pharmacy and medical spending.
It’s important to note that the use of analytics is not about restricting care. It’s about aligning clinical and financial priorities to reduce inefficiencies and costs through an overarching but tightly organized approach. Balancing financial pressures with expectations around quality and access and applying them to pharmacy management is becoming more recognized as a strategic function, not an attempt to control costs though administrative policies.
Increased scrutiny of pharmacy pricing has given employers, health systems and benefit leaders greater visibility into how pharmacy dollars move within the system, and if their financial incentives serve members’ best interests.
“Historically, PBMs have been a little bit of a black box,” Hanson said. “I think there’s been misaligned incentives, especially with traditional PBMs’ lack of information, which burdens employers and members and drives up healthcare costs.”
Limited insights have restricted organizations’ ability to evaluate pricing structures or savings, or even completely understand how decisions are made. Spread pricing, retained rebates and vertically integrated pharmacy ownership can misalign incentives and make accountability murky.
“Alignment really happens when every stakeholder sees the same level of data and operates with the same incentives, and that we’re all accountable to the same outcomes,” Williams said.
Member experience is connected to transparency. Helping members become better informed consumers through more accessible education around medication costs, therapeutic alternatives and pharmacy options supports better decision-making that improves affordability and engagement with their own care.
In response to complex pharmacy pricing, healthcare leaders must reassess how pharmacy benefits fit into a broader strategy. PBMs are increasingly being evaluated not simply as intermediaries that process claims, but as strategic partners expected to support measurable financial, clinical and operational outcomes. The interest in models that provide greater visibility, opportunities for earlier intervention, and robust alignment between financial and clinical priorities is growing.
Data access, predictive analytics and digitally enabled decision-making are becoming increasingly integral to this evolution. Cost, care and member experience can no longer be siloed. New approaches to PBM must integrate them into an overall strategy that supports measurable outcomes in all three areas.
This shift is more than simply upgraded technology. It gives CFOs, pharmacy leaders, benefits executives and population health stakeholders the power to form pharmacy benefit structures based on full transparency. This evolution can help reduce complexities and costs in a primary sector of the healthcare industry.
The combination of real-time analytics, transparent pricing structures and predictive capabilities is a powerful toolset for improving financial sustainability and profitability, not to mention the ultimate beneficiaries of such improvement: the patients themselves.
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