The PBM Evolution
- Demand for transparency. Many states and employers are pushing for more transparent PBM models, moving away from traditional opaque practices that can increase costs.
- Focus on high-cost drugs. The rising costs of GLP-1s, gene therapies, and other specialty drugs are a major focus, with PBMs developing strategies to manage these expenses.
- Increased state oversight. Regulatory actions, such as Ohio's Medicaid program transitioning to a pass-through PBM model, are increasing oversight of PBM practices and driving greater transparency in reimbursement.
- Data analytics for patient care. PBMs are leveraging data analytics to improve medication adherence, identify cost-effective therapies, and enhance overall patient care.
Pharmacy benefit managers (PBMs) were born in the late 1950s1 to do one thing well: act as a third-party intermediary between pharmacies, plan sponsors, manufacturers, and wholesalers. Somewhere along the way, that purpose got lost. Today’s “Big 3” PBMs are weighed down by misaligned incentives, opaque practices, and vertical integration that serves shareholders before patients.
Now, a new wave of tech-enabled pharmacy benefit providers is flipping the script. Free from the baggage of owning pharmacies or relying on rebate revenue, next-generation PBMs are proving pharmacy care can be transparent, affordable, and patient-focused. The future belongs to those who combine technology-driven efficiency with human-first care.
Turning data into foresight
From the moment a doctor writes a prescription to when it’s filled, visibility in the supply chain often disappears. Ironically, you get more real-time transparency tracking groceries on Instacart than you do tracking your medication.
On Instacart, you can choose your store, compare prices, and track your delivery down to the minute. With prescriptions, the pharmacy’s a mystery, timing’s a guess, and transparency is nonexistent. That’s not just inefficient; it’s proof of a system that failed the patient.
Forward-thinking PBMs use transparent pricing, real-time delivery updates, and predictive analytics that spot care issues before they become crises. For example, a menopausal woman on hormone therapy may qualify for a GLP-1 treatment based on metabolic risks, even if her BMI falls below today’s cutoff. Innovative technology can connect those dots, improving outcomes while preventing costlier interventions.
Innovation should feel human
Innovation can’t only focus on operational efficiency—it must include patient support. With primary care shortages worsening, pharmacists are one of healthcare’s most underutilized assets. They are highly trained providers who can manage complex therapies, catch adverse reactions, and help patients understand their care.
Empowering pharmacists to practice at the top of their license expands access to preventive care and chronic condition management that often falls through the cracks.
The same is true for health coaches and care guides. In one GLP-1 weight management program, for example, members who received personalized coaching and education lost an average of 22 pounds and improved adherence by 40%. That engagement improves outcomes while helping employers avoid unnecessary costs. It’s proof that healthcare works better when innovation starts with people.
Breaking free of outdated revenue streams
The biggest roadblock to PBM innovation is the vertically integrated revenue model. The Big 3 rely heavily on rebates from manufacturers2 and profits from their own mail-order and specialty pharmacies, locking them into protecting profits instead of looking for new ways to serve members.
Innovative PBMs don’t have that conflict. They can align incentives, put clinical appropriateness first, and deliver savings without layers of complexity. Employers and patients aren’t asking for incremental fixes. They want clarity, accountability, and real affordability in prescription care.
Next-generation PBMs are proving it’s possible by aligning cost with care, giving full visibility to data and decisions, and innovating without outdated revenue streams.
Susan Thomas is Chief Commercial Officer at LucyRx
References
1. Mattingly II, T.J.; Hyman, D.A.; Bai, G. Pharmacy Benefit Managers History, Business Practices, Economics, and Policy. JAMA Health Forum. November 3, 2023. https://jamanetwork.com/journals/jama-health-forum/fullarticle/2811344
2. FTC Sues Prescription Drug Middlemen for Artificially Inflating Insulin Drug Prices. Federal Trade Commission. September 20, 2024. https://www.ftc.gov/news-events/news/press-releases/2024/09/ftc-sues-prescription-drug-middlemen-artificially-inflating-insulin-drug-prices
3. FTC Releases Interim Staff Report on Prescription Drug Middlemen. Federal Trade Commission. July 9, 2024. https://www.ftc.gov/news-events/news/press-releases/2024/07/ftc-releases-interim-staff-report-prescription-drug-middlemen
