Question 1

What is a transparent or pass-through PBM?

Accepted Answer

A transparent (or pass-through) PBM charges only disclosed administrative fees and passes through 100% of manufacturer rebates and actual pharmacy costs to the employer. Unlike traditional PBMs that earn hidden revenue through spread pricing and rebate retention, transparent PBMs have a simple, auditable fee structure. Employers can verify that they are paying exactly what the PBM pays pharmacies, plus a disclosed per-claim or PEPM administrative fee.

Question 2

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

Accepted Answer

Employers typically save 10–25% on total pharmacy costs by switching from a traditional PBM to a transparent PBM. Savings come from: eliminating spread pricing (traditional PBMs charge employers 10–30% more than they pay pharmacies), receiving 100% of manufacturer rebates (traditional PBMs retain 15–30% of rebates), and lower specialty drug costs (transparent PBMs use independent specialty pharmacies rather than owned specialty pharmacies). Conduct a PBM market analysis to quantify your specific savings opportunity.

Question 3

What are the leading transparent PBM vendors?

Accepted Answer

Leading transparent PBMs include: Navitus Health Solutions (owned by SSM Health and Dean Health), Capital Rx (technology-forward, JUDI platform), RxBenefits (broker-focused, strong analytics), SmithRx (tech-enabled, fast-growing), and Rightway (integrated with primary care navigation). Each has different strengths in employer size fit, technology platform, specialty pharmacy management, and clinical programs. The profiles on this page document each vendor's publicly available differentiators.

Question 4

What contract terms should I require from a transparent PBM?

Accepted Answer

Key contract terms for transparent PBMs: 100% rebate pass-through (all manufacturer rebates credited to the employer), pass-through pricing (employer pays actual pharmacy cost plus disclosed fee), audit rights (ability to audit actual pharmacy invoices), formulary design rights, specialty pharmacy carve-out rights, performance guarantees with financial penalties, and termination provisions. These terms should be standard with transparent PBMs — if a vendor resists any of these terms, that is a red flag.

Question 5

How do I conduct a PBM market analysis to evaluate transparent PBMs?

Accepted Answer

A PBM market analysis involves: gathering 12 months of pharmacy claims data (from your current PBM), issuing an RFP to 3–5 transparent PBMs with standardized pricing scenarios, comparing bids on a total cost basis (ingredient cost + dispensing fees − rebates + admin fees), evaluating clinical programs and technology platforms, checking references from current employer clients, and modeling the net savings after implementation costs. Engage a benefits consultant with PBM expertise to manage the process.

Transparent & Pass-Through PBM Vendors