PMPM Savings Case Study: How SmithRx Reduced Costs by $35 Per Member Per Month

“There are always new opportunities to save on drugs. We appreciate the continuous innovation especially as the market evolves and programs change.”

Mara Rayner
Director of Human Resource Benefits, MCUL

What Does PMPM Mean in Pharmacy Benefits?

PMPM, or per member per month, is a standard metric used by employers, health plans, and pharmacy benefit managers (PBMs) to measure pharmacy costs. It represents the average monthly cost for each enrolled member in a health plan.

In simple terms, PMPM shows how much an organization is spending on prescriptions for each member, each month, making it one of the most important benchmarks for evaluating pharmacy benefit performance.

In this case study, the organization reduced its pharmacy spend by $35 PMPM, meaning costs decreased by $35 per member per month after switching to SmithRx. This resulted in nearly a 30% overall reduction in pharmacy costs, demonstrating how impactful even a single PMPM improvement can be when applied across an entire population.

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How Do You Calculate PMPM?

PMPM, or per member per month, is calculated by dividing total pharmacy spend by the number of members over a given time period.

This formula provides a consistent way to measure and compare per member per month costs across different PBMs and plan designs.

What Drove the $35 PMPM Savings

The Montana Credit Union League Group Benefit Trust provides health and life insurance benefits to nearly half of the 45 credit unions in the state of Montana. We spoke with Mara Rayner, Director of Human Resource Benefits at the Montana Credit Union League Group Benefit Trust (MCUL) and Dara Anderson, Employee Benefits Team Lead at Leavitt Great West Insurance to hear more about their journey to reduce MCUL’s pharmacy costs.

In 2021, MCUL’s pharmacy costs were “out of control” according to Mara. “They were 30% higher than any other of our clients at the time, we knew we could get them down significantly,” said Dara of where MCUL started. With Dara’s guidance, MCUL did an RFP for a new pharmacy benefits manager and “SmithRx was easily the best company we were looking at,” says Mara. “We had great guidance from Dara on how to structure the RFP and evaluate responses, but in the end it was easy to make the choice. There were several PBMs that said they could deliver significant savings but the attention and level of service we received from Jake [Frenz] and team was exceptional.

”The transition over to SmithRx was pretty seamless as well. “Making a move like this is never easy. Of course there is going to be some member disruption and we ran into some of that. I remember at the beginning there was a specific member having challenges and the SmithRx member services team stayed late and worked with the member and me to make sure that member was taken care of. That got us off to a strong start.”

“Since then, we’ve seen significant reductions in our PEPM from $143 in 2021 to the 2022 average of $88. There have been challenges along the way, but overall SmithRx has been communicative about those challenges and addressed issues quickly.

”Dara adds “I appreciate how communicative your team is. When I have a question, the team helps me understand the context that’s involved. I always learn something from you and am able to use that knowledge to help MCUL even more.”

Why PMPM Savings Matter for Employers

For employers, pharmacy benefits are a major and growing expense. Focusing on PMPM savings, or reductions in per member per month costs provides a clear, consistent way to measure and manage that spend.

Unlike total costs alone, PMPM gives a normalized view of pharmacy spending per individual, making it easier to compare PBMs, track performance, and identify real savings opportunities.

Key Benefits of PMPM Savings

• Predictable budgeting: PMPM creates a stable, scalable cost model for forecasting

• Measurable impact: Even small reductions in per member per month costs can lead to significant annual savings

• Greater transparency: PMPM makes it easier to evaluate PBMs and validate true savings

• Better decision-making: Employers can track trends and optimize benefits strategies over time a

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