Evaluating PBM Contracts Without Guarantees

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PBM contracts used to follow a familiar script. The PBM quoted discounts, dispensing fees, and rebate guarantees, then reconciled performance at year’s end. More employers and benefits consultants now see pharmacy contract proposals with limited guarantees or entirely without guarantees, usually in pass-through designs and transparent PBM models. In many cases, these arrangements place greater emphasis on pricing structure, clinical programs, and ongoing management strategies rather than classic discount, dispensing fee, and rebate guarantees. As a result, they are best supported by a different approach to evaluation and ongoing oversight.

Traditional vs pass-through PBM models

PBM contracts with a traditional guarantee structure are inherently different from the newer guarantee-free models.

In a traditional model, the PBM may retain spread and some manufacturer revenue depending on the contract, so guarantees help plans compare offers and enforce accountability.
In a pass-through model, the PBM typically passes through ingredient cost and manufacturer revenue based on defined rules and earns administrative fees instead. That change can reduce the role of classic reconciliation guarantees, but it raises the bar for clear definitions and monitoring.

What a PBM contract without guarantees really means

A pharmacy contract without any guarantees can mean several things. Sometimes the contract removes traditional annual aggregate pricing and rebate guarantees. Other times, it removes guarantees entirely and relies on the PBM’s strategy, programs, and reporting to demonstrate value. These guarantee-free arrangements tend to fall into three broad patterns:

Cost-plus pricing with limited reconciliation – Some PBMs base their pricing on published benchmarks such as NADAC, instead of AWP discounts. This approach can simplify comparisons because it relies less on negotiated discount guarantees, but it still depends on clear definitions and audit rights.
Percent reduction guarantees – Some transparent PBMs replace rebate and pricing guarantees with a promise to reduce total plan spend per member per month (PMPM) against an agreed baseline. To evaluate these arrangements, plans need clear definitions for the baseline, the reduced cost calculation, and the membership count used in the PMPM measure.
Minimal or no guarantees paired with program claims – Some PBM offers rely on illustrative rates or high-level ROI statements tied to bundled programs. Without clear reconciliation, the plan must lean more on governance and validation.

Why some plans consider PBM contracts without guarantees

For many plan sponsors, the appeal of the PBM’s ‘transparent’ strategy is strong enough to warrant a contract without guarantees. Pass-through and transparent PBM designs may bundle programs that traditional arrangements treat as add-ons, such as copay maximizer approaches and patient assistance support. With administrative fees replacing spread, the PBM may also position its model as aligned to lowest net cost. Some plan sponsors may choose to accept more variability and risk if they believe these levers will reduce net cost over time, while more budget sensitive groups may still prefer a firm financial floor.

Some states now require certain groups to use pass-through arrangements or price drugs using specific benchmarks, which increases exposure to guarantee free formats and pushes PBMs to broaden what they can offer. Even so, most employers still want savings with minimal disruption, so the contract structure needs to match the organization’s tolerance for change.

What to watch for

The biggest trade-off when assessing guarantee-free PBM contracts is evaluability. Traditional guarantees provide clear levers for comparing proposals and measuring performance. When guarantees disappear or shift into more abstract commitments from the PBM, the analysis may depend more on estimates or a PBM’s self-reported projected savings instead of concrete data. Many projections also rely on member behavior assumptions, such as adoption of a program, drug switching, biosimilar use, or channel shifts.

ROI language can add another layer of risk. Some contracts without guarantees may reference an ROI multiple relative to administrative fees, but the baseline and measurement method may be unclear. Evaluation should confirm what the PBM uses as their starting point when it reports savings and whether the calculation can be traced back to claims and program data.

An additional consideration is planning for member disruption. Many savings strategies depend on formulary changes, drug switching, and channel shifts, which can affect where members fill and which products they use. Some newer or guarantee-free PBMs may have narrower networks in certain areas, which could make a required pharmacy change particularly disruptive.

Key considerations when evaluating PBMs without guarantees

When considering a contract without guarantees, the focus should shift from reconciliation to governance. It’s important to define success, specify how the PBM will prove it, and ensure results can be verified independently.

Define the baseline. Document the starting point for any percent reduction guarantee or ROI claim, including exclusions and assumed trend.
Require auditable reporting. Set cadence, fields, and file formats so plan sponsors and consultants can validate ingredient cost, rebates, fees, and program outcomes.
Track adoption and outcomes. Monitor outreach and conversion rates, not only savings summaries.
Clarify consequences. Set service expectations, remediation steps, and termination rights if performance falls short.
Preview disruption. Evaluation should identify which switches and channel shifts drive savings and how member impact will be managed.
Confirm the full fee picture. Understand PBM administrative fees and any program fees, and whether they scale with utilization or membership.

Contracts without guarantees are not automatically better or worse. If traditional reconciliation guarantees are removed, we recommend replacing them with clear baselines, transparent reporting, and disciplined oversight. Strong monitoring helps validate savings in real time, manage disruption, and avoid surprises at the time of renewal. With Truveris, plan sponsors can compare contracts with or without guarantees on an apples-to-apples basis and provide oversight to validate performance throughout the contract term.