Full PBM Model or Utilization Management Only? Choosing the Best Pharmacy Benefits Option

Full PBM Model or Utilization Management Only? Choosing the Best Pharmacy Benefits Option

Building a high-value benefits plan is crucial for self-insured employers to control costs while improving employee satisfaction. However, this is easier said than done on the pharmacy side of healthcare benefits, as prescription drug costs continue to rise in response to a myriad of factors, including inflationary pressures, utilization, and, most notably, the conflicted PBM relationship characterized by hidden profits at the expense of plan sponsors and enrollees.1

Employers who self-sponsor their health plans take a front seat in their pharmacy benefit plan decisions, but selecting the right solution can be challenging due to binding contract terms and a lack of transparency from PBMs. That’s why clinical pharmacy organizations like US-Rx Care provide more than one option, allowing employers to choose the solution that best fits their needs while providing the highest value possible — whether it’s full pharmacy benefits management or behind-the-scenes utilization management.

Piece-Meal or Full-Service: Evaluating Pharmacy Benefits Solutions

Selecting the right pharmacy benefits solution depends on a number of factors, including existing vendor relationships, financial considerations, and overall goals for your pharmacy plan. Self-insured employers can select one of these two solutions:

  • Pharmacy benefits management. The full PBM model encompasses every service that touches the pharmacy benefit, including formulary management, claims processing, pharmacy network management, medication management, and specialty pharmacy services. This comprehensive approach provides an all-in-one solution to help employers streamline pharmacy benefits administration by keeping all prescription drug information in one place.
  • Utilization management. Instead of an all-inclusive solution, employers can leverage utilization management to establish a stronger clinical backbone within their existing PBM relationship. This solution focuses entirely on reviewing prescription drug claims through a clinical lens, with a team of healthcare professionals working to ensure members receive the best possible medication at the lowest available price. By targeting utilization patterns and promoting cost-effective prescribing practices, this solution aims to control pharmacy costs while ensuring appropriate medication utilization.

Maximize Savings and Satisfaction With a Fiduciary Partner

Despite best appearances, a PBM or utilization management organization will fail to provide optimal savings if they do not contractually adhere to fiduciary responsibilities — the same standards that self-insured employers are required to follow. A fiduciary partner like US-Rx Care can fundamentally transform an employer’s pharmacy benefit plan, leveraging a PBM or utilization management solution to unlock higher value and deliver maximum savings for both the plan and its enrollees.

The core difference between traditional and fiduciary PBMs is the ultimate goal of their efforts. Where traditional PBMs notoriously seek opportunities for profit, a fiduciary only works in the plan’s best interest, operating with full price transparency and eliminating every conflict of interest. By removing hidden profits from the equation, fiduciaries can negotiate lower prices, optimize formularies to only include the appropriate medications, and implement cost-saving strategies tailored to each employer’s plan needs.

Choose the PBM That Works For, Not Against, Your Plan

As a leader in the fiduciary PBM space, US-Rx Care has the clinical and pharmacy benefit administration expertise necessary to sharply cut the costs of needed prescription drugs. Our full PBM solution is proven to save up to 50% on pharmacy benefit costs in just 12 months for self-insured employers. Alternatively, employers who wish to keep their PBMs can carve out utilization management and prior authorization functions to our clinically-based Right Rx program. By advocating strictly for your enrollee’s best interest, Right Rx saves an average of $15-$25 per enrollee per month with over 30% or greater out-of-pocket savings for non-specialty, specialty, and J-code prescription drugs. Whether your organization is looking for partial or full pharmacy optimization, US-Rx Care has the tools and cost-saving frameworks in place to deliver the savings and plan value your enrollees deserve.

Learn more about US-Rx Care’s pharmacy benefit services to discover which solution is best for your plan.


  1. Wager, E., Telesford, I., Cox, C., Amin, K. (2023, September 15). What are the recent and forecasted trends in prescription drug spending? Peterson-KFF Health System Tracker. https://www.healthsystemtracker.org/chart-collection/recent-forecasted-trends-prescription-drug-spending/#Annual%20change%20in%20per%20capita%20retail%20prescription%20drug%20spending,%201970%20-%202021;%20projected%202022%20-%202031%C2%A0
6 Risks of Ignoring Fiduciary Duties in Pharmacy Benefits Management

6 Risks of Ignoring Fiduciary Duties in Pharmacy Benefits Management

Self-insured employers assume a measurable amount of risk when sponsoring their own health plans, yet this risk often pays off in the form of lower healthcare costs and consistent bottom-line savings. However, what many employers overlook is the new risks associated with fiduciary standards in pharmacy benefits management. Even though employers do not play a direct role in managing pharmacy benefits for their enrollees, they’re still on the line for a failure to uphold fiduciary responsibilities by partnering with the wrong pharmacy benefits manager (PBM).

The Critical Importance of Fiduciary Duties

Fiduciary requirements demand ethical and cost-effective pharmacy benefits management that prioritizes enrollees’ health and quality of life. This entails making clinically informed decisions, guaranteeing transparency around price and necessity, and diligently overseeing PBM activities to optimize both financial and health outcomes. Failure to uphold these duties puts self-insured employers at risk of:

  • Financial Losses. Overlooking fiduciary responsibilities opens the door to a host of financial risks that can strain employee budgets and employer bottom lines. The Employee Retirement Income Security Act of 1974 (ERISA) serves to protect plan sponsors and enrollees from wasteful spending, most notably in pharmacy benefits.1 Without proper oversight, PBMs engage in profit-driving practices that drive up prescription drug costs, resulting in excessive spending that undermines financial sustainability.
  • Legal Repercussions. Failure to fulfill fiduciary duties exposes plan sponsors to legal liabilities, as evidenced by the J&J class action lawsuit. By neglecting to negotiate drug costs with pharmacies in its enrollees’ best interests, J&J cost its employees millions of dollars in unnecessary pharmacy spend.2 For one multiple sclerosis drug that should cost an estimated $77 out of pocket, J&J’s plan paid an estimated $10,200 — a glaring example of heavily inflated pharmacy costs that enrollees should be protected from.2
  • Diminished Care Quality. Prioritizing profit over patient care in PBM arrangements directly opposes fiduciary responsibilities to work only in the best interests of the enrollee. When these duties are disregarded, PBMs inevitably redirect their focus to building hidden profits into contract terms — rather than finding new ways to optimize care. As a result, restrictive formularies and exorbitant prescription drug costs can lower the quality of care, leading to suboptimal health outcomes.
  • Loss of Trust From Plan Members. Neglecting fiduciary duties quickly erodes trust between employers and plan members. When employees perceive that their interests are not being prioritized — or protected, at the very least — they lose trust in their employers and begin to question their benefit integrity. This can substantially harm employee satisfaction, company morale, and retention, resulting in lower productivity and organizational performance.
  • Increased Regulatory Scrutiny. Regulatory bodies are on the lookout for self-insured employers who violate fiduciary standards — even when done unknowingly — and regularly conduct audits, impose penalties, and enforce stringent measures to root out and address non-compliance. These interventions not only disrupt operations and obstruct cash flow but also broadcast the plan sponsor’s lack of commitment to ethical benefits management.
  • Erosion of Employee Benefits. As healthcare costs continue to balloon, fiduciary standards play a larger role in safeguarding benefit integrity. Without these guardrails in place, plan sponsors may resort to cost-cutting measures that compromise the quality and accessibility of employee benefits, leading to poorer employee health and higher turnover rates.

How to Uphold Fiduciary Duties in Pharmacy Benefits Management

To mitigate each of these risks, self-insured employers must prioritize fiduciary oversight throughout PBM arrangements. This entails thoroughly vetting PBMs, insisting on price transparency and rebate arrangements, and conducting independent audits to assess performance and adherence to fiduciary standards. By working with a certified fiduciary pharmacy benefits manager like US-Rx Care, plan sponsors can bypass these risks and have complete peace of mind that their PBM is working in the best interests of the plan and every enrollee with aligned interests for the highest quality of care at the lowest possible cost.

Learn more about how US-Rx Care can help your plan ensure fiduciary compliance and maximize pharmacy savings.


  1. Fiduciary Responsibilities. (n.d.). U.S. Department of Labor. Accessed April 3, 2024, from https://www.dol.gov/general/topic/retirement/fiduciaryresp
  2. Wiessner, D. (2024, February 6). Reuters. https://www.reuters.com/legal/litigation/jj-faces-class-action-over-employees-prescription-drug-costs-2024-02-05/

Large PBMs Balk at Push to Reduce Drug Prices

In a move that exemplifies the potential conflict of interest that some large pharmacy benefit managers have, the nation’s largest PBM earlier this year said it would demand that rebates remain unchanged when drug makers roll out new price cuts.

Drug makers earlier in the year said they would start reducing prices as well as the rebates they pay PBMs to appease lawmakers and the Trump administration, saying it would reduce the cost of medicine for patients.  

But not long after the announcement, the nation’s largest PBM, United Healthcare, fired off a letter to drug companies telling them that if they planned to reduce prices and rebates they would have to give seven quarters of notice (that’s 21 months if you’re counting) when they intend to lower prices.

The letter, which was confirmed in news reports in the health care trade press, highlights what many critics say is an inherent conflict of interest among some of the large PBMs operating in the country.

Some background

When PBMs first came on the market, the services they offered were processing pharmacy claims and negotiating discounts on medications for the health insurance companies with which they contracted.

Later though, they found a new way to make money: rebates. They would approach two manufacturers that made similar versions of a drug and play them off against each other to elicit the largest rebate they could. Whichever one offered the larger rebate would have their pharmaceutical placed on the drug plan’s formulary.

The problem is that these large PBMs do not pass on the full rebate to their clients, like health insurance companies and health plan enrollees. Instead, they keep most of the rebate for themselves. As a result, PBMs with this business model are not motivated to include the lowest-priced drug on their formulary, but rather the one for which they can receive the largest rebate check.

The latest

United Healthcare sent out the letter to drug makers after pharmaceutical manufacturer Sanofi S.A. said it would cut the price of its cholesterol-lowering drug Praluent by 60%. It did so after its competitor Amgen Inc. reduced the price of its cholesterol drug Repatha by the same amount.

United Healthcare’s demand that drug companies give 21 months’ notice when they plan to reduce prices has caught many drug makers off guard, since many of them have been looking to cut prices as pressure mounts on the industry from Washington.

The dominance of United Healthcare’s PBM OptumRX and its competitor Express Scripts means that group health plan enrollees are often left at their mercy, as many large health insurers have contracts with them.

If a drug company does not give the rebate that a large PBM demands, it could lose access to patients – and patients lose access to that drug. The only way to play the game is to offer a larger rebate and increase prices, which in turn increases the prices that patients have to pay.

Fortunately, there are a number of smaller PBMs in the marketplace that have different business models that take payers’ needs into consideration and aim to reduce the out-of-pocket costs for patients. They contract with employers and insurers directly to make this happen.

Trump Administration Decides Not to End PBM Rebates

The Trump administration has decided not to pursue a policy that would have put an end to rebates paid to pharmacy benefit managers, which could put the focus again on how drug companies set their prices.

The proposal would have barred drug companies from paying rebates to PBMs that participate in Medicare and other government programs. According to the administration, the proposed rules were shelved because Congress had taken up the issue to control drug costs.

The spotlight has been harsh on some of the country’s largest PBMs, which have been accused of pocketing a substantial portion of the rebates for themselves while passing on only a sliver of the rebates to the insurance companies that hire them and the health plan enrollees that pay out of pocket for the drugs.

Rebates had become a popular target of criticism in Washington after drug companies lobbied aggressively to cast them as the reason for high prices. PBMs negotiate drug discounts in the form of rebates, often keeping some of that money for themselves.

However, many pundits say that the rebate system put in place by large, national PBMs incentivizes drug companies to keep list prices high, which in turn defeats the purpose of the PBMs – that is, to reduce the out-of-pocket costs that health plan enrollees pay for their prescription drugs.

Like insurers and PBMs, some of which have sought to undermine the practice with accumulator adjustment programs, the Trump administration believes such coupons may be driving up health care spending by getting patients to opt for higher-priced name-brand drugs over generics.

The Centers for Medicare & Medicaid Services proposal unveiled in January would have essentially blocked drug manufacturer rebates from going to PBMs and health plans that serve Medicare and Medicaid patients, starting next year.

Now that the push to eliminate rebates has come to end, the focus looks like it’s shifting to how drug companies price their products. We will keep you posted if any legislation surfaces in this area.