Question 1

How much can employers save by switching to a transparent PBM?

Accepted Answer

Self-funded employers typically save 10–25% on total pharmacy costs by switching from a traditional PBM to a transparent, pass-through PBM. Savings come from eliminating spread pricing (3–8%), receiving 100% of rebates (5–15%), and better specialty drug management (5–15%). The exact savings depend on your current contract terms, drug utilization mix, and specialty drug spend.

Question 2

What is the ROI of a PBM audit?

Accepted Answer

PBM audits typically recover 3–8% of pharmacy spend in overcharges, with audit costs of $15,000–$50,000. For an employer spending $2 million annually on pharmacy, a 5% recovery equals $100,000 — a 2–6x return on audit investment. Beyond direct recovery, audit findings provide leverage for contract renegotiation and identify systemic issues that compound savings over time.

Question 3

How do I calculate my pharmacy savings potential from rebate pass-through?

Accepted Answer

Estimate rebate pass-through savings by requesting your current rebate reconciliation report showing total rebates collected versus passed through. If your PBM retains 30% of rebates and you receive $500,000 annually, full pass-through would add approximately $215,000 in savings. For a rough estimate, multiply your total pharmacy spend by 8–12% — the typical rebate value for a mid-size employer plan.

Question 4

What pharmacy cost drivers have the biggest savings potential?

Accepted Answer

The highest-impact pharmacy cost drivers are specialty drugs (50–55% of spend, 15–30% savings potential through carve-out), spread pricing (3–8% of spend, 100% recoverable with pass-through contract), rebate retention (5–15% of spend, recoverable with pass-through terms), and generic dispensing rate optimization (2–5% savings from improving generic substitution rates).

Question 5

How do I use the PBM Savings Calculator?

Accepted Answer

Enter your total annual pharmacy spend, current generic dispensing rate, estimated rebate pass-through percentage, and specialty drug spend percentage. The calculator estimates savings from each lever: spread elimination, rebate pass-through, generic optimization, and specialty carve-out. Use the results as a starting point for discussions with your broker or benefits consultant about a PBM market check.