SmithRx, a pharmacy benefits manager (PBM) known for its transparency and 100% pass-through model, announced the launch of a new PBM evaluation methodology aimed at reducing pharmacy benefits costs. Detailed in SmithRx’s newly released PBM Evaluation Guide, this cost-based evaluation method presents an innovative approach to pharmacy benefits management. Accompanying the guide, SmithRx has also shared new data demonstrating significant cost savings for employers through its strategy, establishing a new benchmark in the PBM industry.
SmithRx’s approach prioritizes achieving the lowest net cost for prescription medications for employer clients, contrasting with the common industry practice of seeking higher discounts. While both methods aim to reduce costs, SmithRx’s data highlights that focusing on lower net costs yields substantially greater savings on pharmacy benefits. Combined with SmithRx’s transparent, pass-through business model, employers experience considerable cost reductions, thereby lowering healthcare expenses for both themselves and their employees.
The impact of SmithRx’s strategy is evident in their proprietary data:
- $113.7 million in new annualized savings year-to-date from Connect 360 programs across the SmithRx customer base, translating to an average of $24 cost savings per member per month (PMPM).
- 20-40% lower average PMPM compared to other pass-through and traditional PBMs.
- $31 million in new annualized savings year-to-date from customers who have opted to save on autoimmune drugs, some of the most expensive medications available.
Historically, the PBM industry has been dominated by three major players – CVS Caremark (owned by CVS Health), OptumRx (owned by UnitedHealthcare Group), and Express Scripts (owned by Cigna). These companies control over 80% of the market share and employ opaque pricing structures and preferred pricing at their owned pharmacies to maximize profits. This dominance has led to rising drug costs and restricted access to medications for small businesses and their employees, with significant impacts on healthcare spending.
SmithRx’s new PBM Evaluation Guide aims to educate benefits brokers, HR professionals, and consultants on selecting pharmacy benefits for their clients or employees. The guide advocates for a cost-based evaluation method to ensure a thorough review of PBM options and is the first in a series of resources highlighting the flaws of the traditional PBM business model and demonstrating how pass-through methods can improve drug spending for small businesses in America.
“The PBM industry is at a crossroads today, as light is finally being shed on the lack of transparency and fairness in traditional business models,” said Jake Frenz, founder and CEO of SmithRx. “At SmithRx, our data shows how removing tactics like spread pricing and rebate take – and focusing instead on connecting patients to the lowest cost source of supply – leads to widespread cost savings for our customers and their employees. It’s clear that it is possible to create an ethical PBM industry, one that has the best interest of patients at heart. But it’s critical that we empower those willing to divest from the status quo with the information, context, and support they need to make informed decisions.”
SmithRx’s new methodology and data provide a compelling case for a more transparent and cost-effective approach to pharmacy benefits management, challenging the established practices of traditional PBMs.