Introduction

Letter from Jake Frenz, Founder and CEO of SmithRx

Dear Reader,

As the founder of SmithRx, I have firsthand experience with the challenges and pitfalls of evaluating Pharmacy Benefit Managers (PBMs). The process of selecting a PBM can be exceedingly frustrating, as it often feels like a never-ending game of cat and mouse. There’s always another contract loophole or an additional layer to uncover, and, invariably, these complexities seem to favor the PBM.

Today the PBM industry is at a critical juncture, with the traditional models of operation being challenged by the urgent need for transparency and fairness. It’s no secret that the waters are muddied with hidden fees, complex rebate structures, and practices that prioritize profits over patients. In this guide, we’ve peeled back the layers to give you a clear view of what’s really going on behind the scenes.

Our aim here is to arm you with the knowledge needed to make the best buying decision in an industry fraught with obfuscation. Here are a few key points to consider as you navigate this journey:

1. Demand Transparency: The word “transparency” has become overused in this industry, so it’s critical to know exactly what you expect. Challenge potential PBMs to be clear about their pricing models, rebate management, and how they make their money. If they can’t or won’t disclose this information, you should reconsider putting your trust in their business.
2. Understand the Business Models: Spread pricing, pass-through pricing, a blend of both; cost-based vs. discount-based evaluation; AWP and PMPM—there’s no shortage of concepts in this industry, but understanding their definitions and nuances will help you align with a PBM that suits your financial and ethical objectives.
3. Consider the Impact on Patient Care: Ultimately, the value of a PBM extends beyond dollars and cents to the health and wellbeing of the people it serves. Evaluate how each PBM’s model affects patient access to medications, adherence, and overall outcomes.
4. Shift the Focus to Total Value: While discounts, rebates, and similar incentives can lower costs, they shouldn’t be the sole focus. It’s crucial to assess the total cost of pharmacy benefits and the unique value a PBM can bring, including clinical management programs, customer service, and innovative solutions to healthcare challenges.
5. Seek Partners, Not Providers: Your PBM should be a partner in achieving your healthcare goals, offering support, guidance, and flexibility. A collaborative relationship can lead to better strategies for managing healthcare costs and improving outcomes.

Making the best buying decision requires diligence and critical thinking. With the right information and a clear understanding of your own priorities, you can find a PBM that navigates today’s landscape with integrity and cost-effectiveness.

I hope this guide helps you do just that. With the knowledge in the following pages under your belt, you’ll be equipped to ask the tough questions, see beyond the smoke and mirrors, and choose a PBM partner that aligns with your values and goals. Remember, your decision doesn’t just affect your bottom line; it influences the health and wellbeing of countless individuals who depend on your choices.

Thank you for taking the time to seek out the best path forward in this complex industry and informed choices that lead to better healthcare outcomes for everyone involved. Your role in this journey is crucial, and I am confident that together, we can make a difference.

Wishing you clarity and success,

Jake Frenz
Founder and CEO, SmithRx