Why employers look for PBM alternatives
Pharmacy benefits do not have to follow the same model employers have always used. Many employers start looking at alternatives when their current PBM makes it difficult to understand what they are paying, how rebates are handled, or how pharmacy decisions affect the plan.
Common reasons include:
- Unclear claims pricing
- Spread pricing or hidden markups
- Rebates that are difficult to track
- Multiple administrative and program fees
- Limited access to underlying claims data
- High specialty-drug costs
- Limited control over formulary decisions
- Difficulty comparing the actual cost of different PBM models
A better pharmacy benefit should give employers clearer pricing, useful data, and more control. Read more about Kanurra’s approach on the About Kanurra page.
What are PBM alternatives?
A PBM alternative is another way for an employer to manage its pharmacy benefit instead of relying on a traditional PBM arrangement.
That can include an independent PBM, a different pricing structure, or a PBM that gives employers greater access to claims and underlying pharmacy data. Each gives employers a different way to manage costs, pricing, and access to pharmacy benefit information. See how Kanurra works.
The important question is not simply who manages the pharmacy benefit. It is how the PBM gets paid, how claims are priced, where rebates go, and what the employer can actually review.
What employers should examine
This is where the difference between PBM models becomes easier to see.
Claims-level drug pricing
Look at what the plan is billed for each prescription and how that compares with the underlying pharmacy cost.
A strong discount against a list price does not automatically mean the plan is receiving the best available economics.
PBM fees
Understand exactly how the PBM gets paid. Review per-employee fees, per-claim charges, administrative fees, dispensing fees, data fees, and other program charges.
The more clearly each fee is identified, the easier it is to compare PBM alternatives and evaluate the value of each one.
Rebates and manufacturer payments
Find out what manufacturer rebates are generated, how they are handled, and how much reaches the plan.
Also look beyond the word “rebate.” Other payments and fees can affect the economics of the pharmacy benefit.
Spread pricing and markups
Ask whether the PBM charges the plan more than the amount paid to the pharmacy.
If there is a difference, understand exactly where that money goes.
Specialty-drug costs
Specialty medications can represent a significant portion of pharmacy spending.
Review where specialty prescriptions are filled, how prices are established, and how specialty drugs are routed.
Formulary decisions
Understand who controls the formulary and how drug placement decisions are made.
Employers should know how formulary changes can affect both member access and plan costs.
Reporting and underlying data
A summary report tells you what happened. Underlying claim-level data helps you understand why it happened.
Before choosing a PBM alternative, find out what data you will receive and whether you can review it independently.
Questions to ask when evaluating PBM alternatives
These questions help employers compare the economics of different PBM options instead of comparing headline fees alone.
- 01How does the PBM make money?
- 02Is there spread pricing?
- 03Are rebates passed back to the plan?
- 04What fees are charged outside the main administrative fee?
- 05Can we review claims at the line-item level?
- 06Can we access and export our underlying pharmacy data?
- 07Who controls the formulary?
- 08How are specialty medications handled?
- 09Who sets prior-authorization criteria?
- 10What happens when the contract ends?
For more on the first three, see PBM pricing and PBM rebates. For the last one, see switching PBMs.
PBM alternatives should start with your current numbers
Before choosing another PBM, understand what your current arrangement is actually costing. A PBM audit can help you review:
- Claims
- What your plan is paying for individual prescriptions.
- Rebates
- What rebates are being generated and how they are being handled.
- Fees
- What your plan is paying across the pharmacy benefit.
- Spread
- Whether the PBM is charging more than the underlying pharmacy cost.
- Net cost
- What the plan is actually paying after applicable rebates and fees.
Know your current PBM economics before comparing alternatives. The PBM audit checklist walks through what to request.
Frequently asked questions
What are PBM alternatives?
PBM alternatives are different approaches to managing prescription benefits instead of relying on a traditional PBM model. They can include independent PBMs and different pricing or pass-through arrangements.
Why are employers looking for PBM alternatives?
Employers may look for alternatives because of high pharmacy costs, unclear pricing, limited data access, spread pricing, complex rebate arrangements, or a desire for a simpler PBM model.
What is an independent PBM?
An independent PBM is a pharmacy benefit manager that operates independently rather than as part of a large integrated healthcare or insurance organization. Employers should still evaluate its pricing, compensation, contracts, and services carefully.
Are independent PBMs cheaper?
Not automatically. The right comparison is the total net cost of the pharmacy benefit, including claims pricing, rebates, administrative fees, specialty costs, and other charges.
What should I compare when choosing a PBM alternative?
Compare claims pricing, PBM fees, rebates, spread pricing, specialty management, formulary decisions, data access, implementation support, and total net pharmacy cost.
Can I switch from a traditional PBM to an independent PBM?
Potentially, depending on your contract, plan structure, carrier, TPA, and implementation requirements. Employers should review their current agreement before starting a transition. Kanurra can help employers understand the switching process and evaluate their current pharmacy benefit before making a change.
Should I audit my PBM before considering alternatives?
Yes. Reviewing your current claims, rebates, fees, and pricing gives you a baseline for comparing another PBM.
How is Kanurra different from traditional PBMs?
Kanurra uses one flat per-employee-per-month administrative fee, credits 100% of rebates received back to the plan, charges $0 spread or markup on claims, and gives employers access to claim-level pharmacy information.
Looking for a PBM alternative?
Start with the numbers. Review your current pharmacy benefit, understand what you are paying, and see whether a different PBM model could work better for your plan.
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