Hidden Drivers of Pharmacy Costs in PBMs and How to Fix Them

Key Takeaway: Pharmacy costs in PBMs are not driven by pricing alone. They are also shaped by how prescriptions are evaluated as they move through the system. In this article, Dr. Martty Martinez-Fraticelli explains how overlapping therapies, misapplied clinical criteria, and other drug-related problems can increase both plan cost and patient risk when they are not addressed early. Real-time clinical safeguards help reduce unnecessary spend while improving patient safety.

Much of the conversation around rising drug costs tends to center on a familiar set of explanations: spread pricing, rebate structures, formulary design. These are important factors. But they’re not the full story.

There’s another layer of cost that sits beneath them. It might not show up clearly in reports or proposals, and it’s rarely measured in a consistent way. But, over time, it has just as much impact on total spend.

It comes from how pharmacy benefits are actually administered. From the decisions made as prescriptions move through the system. What gets approved, what gets flagged, and what moves forward without question. From therapies that are allowed to proceed even when they don’t align with clinical guidelines. From how prior authorization criteria are applied, which prescriptions are approved without clinical review, and whether those standards are enforced consistently.

This is where the rest of the cost story begins.

Hidden Pharmacy Cost Drivers in Pharmacy Benefit Management

Most PBM models are built to move claims efficiently, which is necessary but also creates a blind spot. When the focus is on processing instead of evaluating, certain patterns begin to take shape within the system.

Therapies overlap when they shouldn’t. Dosing falls outside recommended ranges. High-cost medications are approved without consistent application of clinical criteria. Over time, these decisions add up, driving unnecessary costs for plans and introducing risk to patients.

In one recent transition, we worked with a group moving from a traditional PBM model to PharmPix. The structure of the benefit remained largely the same. The formulary stayed open, and member cost share did not meaningfully increase.

What changed was how therapy was evaluated as it moved through the system. When we compared claims processed under the previous PBM to those managed through PharmPix, the differences were consistent across multiple measures:

• Lower cost per prescription
• Reduced cost per member per month (PMPM)
• Higher generic utilization
• Lower overall utilization, without limiting access

MetricPrevious PBMPharmPixCost per Script$204.51$177.08 ↓Cost PMPM$266.08$232.94 ↓Generic Dispensing Rate86.07%88.25% ↑Total Prescriptions29,06428,260 ↓FormularyOpenOpen

Clinical Safeguards That Improved Drug Spend and Therapy Decisions

These results weren’t driven by broad restrictions or cost shifting. They came from how each prescription was evaluated as it moved through the system, with clinical safeguards in place to ensure decisions were not only safe, but appropriate and aligned with intent.

In some cases, that meant guiding therapy toward lower-cost, clinically equivalent options. A biosimilar strategy for Humira reduced both utilization and spend. Sprycel was transitioned to a clinically appropriate generic alternative.

In others, it meant reinforcing the boundaries of appropriate use. Utilization of Ozempic declined as prior authorization criteria were applied more consistently and clinically unnecessary combinations were no longer approved.

And in many instances, it meant catching drug-related problems that would otherwise go unnoticed. Dosing inconsistencies were corrected. Therapies that did not align with clinical guidelines were addressed before they continued through the system. These weren’t broad cost controls or formulary restrictions. They were protections applied at the moment decisions were made.

That distinction is what changes the outcome. When pharmacy decisions are evaluated in real time, before they reach the patient, fewer unnecessary therapies move forward. Fewer complications develop downstream. Cost and care begin to move in the same direction.

Rethinking What Drives Pharmacy Cost

Pharmacy is often evaluated through financial measures like discounts, rebates, and unit cost. Those metrics reflect what a drug costs at the moment it’s dispensed, but they don’t account for what happens after. Whether the therapy works as intended. Whether it introduces unnecessary risk. Whether it leads to additional treatment or avoidable utilization.

When these factors aren’t addressed early, the impact shows up later. The patient assumes the clinical risk, and the plan absorbs the cost that follows.

A more effective approach evaluates those decisions as they are being made, ensuring therapies are clinically appropriate before they move forward. When that happens, both outcomes and cost begin to change in a measurable way.

FAQs

What drives pharmacy costs beyond drug prices and rebates?

Pharmacy costs can rise when overlapping therapies, inappropriate dosing, inconsistent prior authorization criteria or clinically misaligned treatments are allowed to move forward without review.

How can a PBM lower pharmacy spend without restricting access?

A PBM can apply clinical review at the point of decision to address unnecessary therapies and guide members toward clinically appropriate, lower-cost options without relying on broad restrictions or cost shifting.

How does real-time clinical review improve pharmacy benefit performance?

Real-time review helps ensure prescriptions align with clinical guidelines and benefit design before they are dispensed, reducing unnecessary utilization and avoidable downstream costs.