When should an employer issue a PBM RFP?

Employers should issue a PBM RFP every 3–5 years, at least 12–18 months before contract expiration to allow time for evaluation and implementation. Triggers for an earlier RFP include: pharmacy costs growing faster than medical costs, a PBM audit revealing significant overcharges, loss of confidence in PBM transparency, or a major change in employee population or drug utilization.

What should a PBM RFP include?

A comprehensive PBM RFP should request: pricing guarantees (ingredient cost, dispensing fees, administrative fees), rebate pass-through terms, specialty pharmacy management approach, formulary design rights, audit rights, implementation timeline, account management structure, and clinical program offerings. Include both traditional PBMs and transparent/pass-through PBMs to get a full market comparison.

How do you evaluate PBM RFP responses?

Evaluate PBM RFP responses on total net cost (after rebates and all fees), contract transparency, specialty drug management, formulary flexibility, clinical program quality, implementation support, and account management. Request a financial modeling analysis using your actual claims data to compare apples-to-apples costs across respondents. Weight transparency and audit rights heavily — a lower bid from an opaque PBM may cost more in hidden fees.

What is the difference between a traditional PBM and a transparent PBM?

Traditional PBMs (CVS Caremark, Express Scripts, OptumRx) earn revenue through spread pricing, rebate retention, and specialty pharmacy markups — revenue streams that are hidden from employers. Transparent PBMs (Navitus, Capital Rx, RxBenefits, Rightway) charge only disclosed administrative fees and pass through 100% of rebates and pharmacy pricing. Transparent PBMs typically cost 10–25% less on a net basis for self-funded employers.

How long does a PBM transition take?

A PBM transition typically takes 6–9 months from contract execution to go-live, including system integration, pharmacy network credentialing, member communication, ID card distribution, and formulary migration. Plan for a January 1 or July 1 effective date to align with plan year. Budget for transition costs including member communication, ID cards, and potential disruption for members mid-treatment on specialty drugs.

Procurement

PBM RFP & Selection Guide

Running a competitive PBM RFP is the most effective way to reduce pharmacy costs and improve contract terms. Including transparent PBMs in your RFP creates competitive pressure that traditional PBMs respond to.

The PBM RFP process

1. Gather data: Collect 12–24 months of claims data, current contract terms, and utilization reports.

2. Define requirements: Specify your requirements: pass-through pricing, rebate pass-through, audit rights, formulary control, specialty pharmacy flexibility.

3. Issue RFP to 4–6 PBMs: Include at least 2 transparent PBMs alongside traditional carriers. Competition is your leverage.

4. Normalize responses: Compare responses on an apples-to-apples basis — total net cost, not just ingredient cost or rebate guarantees.

5. Negotiate: Use competing offers to negotiate better terms from your preferred PBM. Don't accept the first offer.

6. Contract review: Have a pharmacy attorney or consultant review the final contract before signing.

Compare PBMs ← Back to hub