By: Kevin Kobielski, President of Navion
Pharmacy contracts don’t age gracefully. What may have been a strong deal years ago could be wildly overpriced today—especially in a market where pricing, rebates, and vendor models evolve quickly. That’s why PBM market checks matter. They aren’t just a contract provision—they’re a mechanism to keep pharmacy pricing competitive and plan performance aligned with the broader market. Yet many employers skip them. Or worse, they’re not included as an option in the PBM contract at all.
What a PBM Market Check Actually Does
A PBM market check gives the employer a contractual right to compare their current pharmacy pricing—discounts, fees, rebates, guarantees—to what’s available in the broader PBM marketplace. It’s a benchmark, a pressure valve, and a way to reopen pricing conversations without waiting for the full contract term to end.
Depending on your existing PBM contract, a market check may:
- Be conducted annually or every 12–36 months
- Trigger automatic repricing if current terms are materially worse than market
- Allow your group to renegotiate without going through a full RFP
That’s why it’s critical to have a team negotiating your contract from the start. In just a few years, your company’s makeup, utilization patterns, and the drug landscape can change dramatically—especially with new, high-cost therapies entering the market. What worked then may not work now.
The Cost of Skipping a PBM Market Check
We’ve seen employers go years—even a decade—without conducting a PBM market check. In those cases, contracts are often rolled over or “evergreened” without reevaluation.
The result? Pricing that’s significantly outdated and inflated.
We’ve reviewed pharmacy contracts where groups were still operating under terms negotiated 8–10 years ago. After a market check, we found 30–40% savings sitting on the table—not through aggressive negotiation, but simply by realigning with current market benchmarks. That kind of delta can have a major impact on plan performance, group and employee premiums and total cost of care and benefits.
Why You May Not Hear This From Your PBM
PBMs operate in a complex, margin-driven industry. Unless an employer group initiates the conversation, better terms or pricing updates may not be proactively offered. It’s not about bad intent. It’s simply how the model is structured. That’s why it’s important for plan sponsors and their pharmacy partners to take an active role in oversight. A PBM market check creates the structure and leverage to ensure your contract keeps pace with changing market dynamics.
The Best PBM Contracts Build This In From the Start
The most effective pharmacy contracts don’t treat market checks as optional—they treat them as standard oversight.
Ideally, they:
- Define the cadence (e.g., annually or every 18-24 months)
- Specify the data and methodology to be used
- Require the PBM to respond with revised terms if discrepancies are found
- Preserve the employer’s right to exit or renegotiate if the pricing isn’t brought in line
When structured well, PBM market checks don’t just reduce costs. They limit disruption to groups and improve the long-term sustainability of the benefit.
Don’t Let a Good Contract Go Stale
Most pharmacy benefit contracts are set for multi-year terms. But the market doesn’t wait for your renewal cycle to change. Formulary trends shift. Drug pipelines evolve. New employees with varying prescription needs join your team. Pricing pressure fluctuates.
A three-year deal can work well—but only if it includes the ability to reassess and adjust along the way. Because in pharmacy, the only thing more expensive than a bad deal is a good deal that quietly got worse.
