Pharmacy benefit contracts are often negotiated for multi-year terms, with pricing locked in for three years or longer. But in a landscape where drug costs, utilization trends, and rebate dynamics shift rapidly, the pricing secured at the start of a contract may not remain competitive throughout its full duration.
A PBM market check provides a structured way to assess whether pricing remains aligned with current market conditions. It enables plan sponsors to validate financial terms mid-contract and explore potential improvements – without conducting a full PBM procurement.
What is a PBM Market Check?
A PBM market check typically takes place in the middle of a contract term – most often after the first year of a three-year arrangement – and compares the financial components of the plan’s current PBM agreement (such as discounts and rebates) to recent pricing secured across the market.
Unlike PBM benchmarking exercises or cost modeling scenarios, a market check uses real-world data from similar pharmacy contracts in the market to assess whether a plan’s current pricing remains competitive. The process is focused only on drug pricing, and most often does not address broader contractual terms or service levels within the PBM contract.
Even small gains from a PBM market check can add up. For plans with high pharmacy spend, improvements of just a few percentage points can result in significant savings.
How PBM Market Checks Work
The process begins with a review of the plan’s current financial contract, which are then compared to current pricing secured by similar plan sponsors. Variables like plan design, geography, utilization patterns, and group characteristics help ensure a fair comparison. The aim is to determine whether pricing improvements are achievable – and if so, where.
To initiate a PBM market check, the PBM contract must contain language that permits it, outlining the timing, scope, and requirements. Without that clause or contractual language, the PBM is under no obligation to engage in the process, even if market conditions have shifted. Some smaller groups may not be eligible for market checks given their size, so it’s important to understand market check eligibility during the contracting process.
When PBM Market Checks Make Sense
PBM market checks are most effective for contracts that span three or more years. They are designed to address the reality that pricing assumptions made at the outset of a contract may become outdated as market dynamics evolve.
Market checks should occur well before the contract’s final year, allowing sufficient time to analyze utilization data, conduct the market check analysis, engage the PBM in discussion, and implement any changes. While PBM market checks are not limited to a specific plan type, their feasibility depends on having the right contractual terms in place from the beginning.
Certain types of contract structures, such as those through purchasing coalitions, may already include cohort-level market checks conducted on behalf of the entire group. In these cases, the individual employer may not have the ability to initiate a separate PBM market check, so it’s important to understand how your contract is structured and whether you have individual access to this type of review.
Best Practices for Leveraging PBM Market Checks
- Include Market Check Language During Procurement – The foundation of any PBM market check is the contract language that enables it. Plan sponsors should ensure that their PBM contract agreements include clearly defined terms outlining when a market check can occur, how comparisons will be made, and whether any threshold is required to trigger pricing adjustments.
- Start the Market Check Process Early – Effective PBM market checks take time to execute. By starting the process early in the contract’s second year, sponsors can ensure there’s enough lead time to conduct the review and negotiate changes before the final contract year begins.
- Focus on Pricing – PBM market checks are limited in scope. They are not intended to renegotiate services, clinical programs, or performance guarantees. Their value lies in identifying whether the core pricing terms (such as discounts and rebates) are still aligned with current market expectations.
- Leverage Claims Data – Access to pharmacy claims data enhances the accuracy and impact of a PBM market check. Reviewing real utilization trends, drug mix, and variances enables a more precise comparison against similar plans. Plans with high specialty drug use or shifting member populations can particularly benefit from incorporating claims analysis into the review to pinpoint targeted pricing opportunities for a market check.
PBM Market Checks as a Lever for Mid-Contract Value
A PBM market check may not overhaul a full pharmacy contract, but it can provide critical insight and deliver real financial value to the plan. When pricing improvements are identified – such as deeper discounts or increased rebate guarantees within the contract’s existing framework – plan sponsors can work with their pharmacy consultant and PBM to adjust those financial components accordingly. In doing so, they reinforce oversight, strengthen accountability, and help ensure their pharmacy program remains aligned with evolving market conditions.
If you are looking to learn more about conducting market checks or how Truveris can support your next market check, Contact Us.
