The Next Gen of PBMs: Building a Cost-Focused Foundation

New Buzzwords, Same Underlying Issues

Many legacy and ‘pass-through’ PBMs tout new programs and models that ultimately build on a broken foundation. Despite fast-changing regulatory and legislative updates (such as the Consolidated Appropriations Act of 2026) many employers remain trapped in opaque contracts. 

Though various PBM players may have adopted ‘transparency’ as a marketing strategy, reality paints a different picture. One-third of employers report that they lack complete data on their pharmacy spend, and 4 in 10 say pharmacy benefits vendors have outright refused to provide it. In the NAHPC 2025 Pulse of the Purchaser Survey, one pharmacy benefits advisor noted it is "terribly difficult to keep up with the games played by the PBMs," making it nearly impossible for even consultants to track hidden fees.

Think of the decision to select a PBM vendor like purchasing a home. You wouldn’t ever make that call without a proper home inspection and if you found a giant crack in the foundation, you likely would be nervous to move forward with the sale. 

Legacy PBMs barely try to hide their cracks: they rely on prestige and promises of exclusive scale to keep customers. Even some so-called ‘pass-through’ PBMs still rely on legacy-style tactics that keep costs artificially high. Think of these players like a hastily flipped home: it may look gorgeous, but in reality, there’s just luxury flooring covering up foundation rot. 

Delivering sustainable pharmacy benefits requires partnering with a PBM that’s gone back to the drawing board to build a truly modern model.

Challenging the Legacy PBM Narrative

Today’s employers are catching on to legacy games. Recent years have seen a major shift occur: contracts with the "Big Three" PBMs dropped from 72% in 2024 to 61% in 2025, while the use of modern PBMs increased by 19%. The justifications legacy PBMs have used to keep their clients are falling flat:

• The Myth of Contract Comparison: When you include a modern PBM in your RFP process alongside legacy vendors, you’ll likely wonder how you can compare these contracts given they are so different. The legacy answer would be, “don’t bother,” but we at SmithRx know value-based comparison is possible. Focusing on key metrics like PMPM (per member per month) costs helps prove the impact of modern, cost-focused models.

• The Myth of Longevity: Legacy PBMs often point to their decades in the industry as a proxy for reliability, implying that a disruptor is too young to trust. However, longevity does not equal efficacy if the provider is building on a broken foundation. SmithRx has a proven, 10-year track record that demonstrates modern PBMs know how to do the job incredibly well without relying on legacy games.

• The Myth of Scale: The Big Three often suggest that only a legacy provider possesses the purchasing power or infrastructure to manage large employer groups. In reality, modern PBMs, like SmithRx, have scaled intentionally to handle groups of any size. The difference lies in a commitment to never sacrificing service for scale. Modern PBMs can support businesses with tens of thousands of employees and more while delivering a level of customer support that legacy giants often fail to provide.

Future-Proofed Foundation: Meet the Drug Pathways Engine

Rewriting the fundamental model of pharmacy benefits to meet 21st-century needs requires the right solution. At the core of SmithRx’s success is our Drug Pathways Engine, a system designed to route every claim to the lowest net cost through three main dimensions:

Drug Mix (Clinically-Guided Selection)

The Drug Pathways Engine intercepts applicable utilization management requirements, prompting clinical experts to coordinate switches to lowest-cost alternatives if clinically appropriate.

Pharmacy Network (Cost-Conscious Sourcing)

The Drug Pathways Engine scans our pharmacy network and directs members to the lowest-cost, most convenient option: anywhere from local pharmacies to mail-order. 

Savings Multipliers (Market Savings Opportunities)

The Drug Pathways Engine triggers program enrollment to capture savings opportunities and secures the lowest net cost for the member and their plan.

Good Faith, Continuous Improvement

Unlike legacy PBMs that retain profit when drug prices drop mid-contract and require regular effort and renegotiation to secure any price improvement opportunities, a modern PBM returns that profit to the employer.

SmithRx is constantly pushing the envelope on price improvements, meaning if a better discount or a lower-cost biosimilar becomes available, the plan realizes those savings upfront.

As we look toward the future of pharmacy benefits, one thing is clear: the status quo is no longer sustainable. While legacy PBMs continue to build on a broken foundation, the shift toward transparency and fiduciary alignment is already well underway. 

To see the full, expert discussion on sustainable benefits, watch “The PBM Evolution: Solutions Built for Future-Proofed Benefits”, now. Get your copy of The Future-Proofed PBM Checklist to identify the pitfalls in your current contract and ensure your next partner is truly modern and ready to tackle 21st-century pharmacy challenges.