How One University Uncovered $400,000 in Pharmacy Benefit Overspending

A Midwest university with approximately 530 employees recently discovered they were overspending on their pharmacy benefits by 33.2%.

Their story shows a common problem facing higher education institutions nationwide: traditional PBM arrangements that prioritize middleman profits over client savings.

The True Cost of Traditional PBM Relationships

This university had been working with one of the "Big 3" PBMs, trusting their pharmacy benefits were being managed efficiently. However, a comprehensive repricing analysis revealed substantial overspending that had gone undetected for years.

The 33.2% overspend translated to hundreds of thousands of dollars annually, funds that could have been allocated to educational initiatives, facility improvements, or employee benefits enhancements.

This financial drain occurred despite the university's diligent oversight of other operational expenses.

Why Traditional PBMs Create Overspending

The university's experience reflects systemic issues with conventional PBM models:

Spread Pricing Practices: Traditional PBMs often charge clients more than they pay pharmacies, keeping the difference as undisclosed profit. This practice inflates medication costs without providing additional value to the plan or its members.

Revenue Stream Opacity: Multiple undisclosed revenue sources create conflicts of interest where PBMs benefit from higher drug costs rather than helping clients achieve savings.

Platform Limitations: Many PBMs use outdated systems that lack sophisticated cost optimization capabilities, missing opportunities for meaningful savings.

The Fiduciary PBM Solution

DisclosedRx operates as The Fiduciary and Fully Disclosed PBM™, functioning as a fiduciary that is contractually required to act exclusively in client interests.

This fundamental difference in approach enabled the identification of the university's overspending and development of a comprehensive cost reduction strategy.

Three Pillars of Cost Reduction

No Spread Pricing: We eliminate the practice of charging clients more than pharmacy acquisition costs. Our clients pay exactly what we pay, with no markup or undisclosed margins.

Single Revenue Source: Rather than profiting from inflated drug costs, we operate with a straightforward administrative fee structure. This alignment ensures cost reduction efforts benefit the client rather than the PBM.

High-Performance Platform: Our proprietary in-house platform is engineered specifically for cost optimization. The system continuously analyzes medication channels, formulary options, and specialty programs to maximize savings.

Full Disclosure in Practice

The university's decision to transition to DisclosedRx reflects confidence in the Full Disclosure model.

Unlike traditional PBM relationships where pricing and rebate information remains opaque, the university will receive complete visibility into:

• Actual drug acquisition costs

• All pharmaceutical rebates and manufacturer credits

• Administrative fees and service charges

• Specialty program savings and member impact

  
  

Member Service Excellence

Our cost reduction efforts always maintain focus on the member experience. The university's employees will benefit from reduced copays, streamlined prior authorization processes, enhanced specialty medication access, and responsive, solution-focused Member Service support.

Lessons for Higher Education

This university's experience offers important insights for other educational institutions:

Regular Repricing Analysis: Periodic evaluation of PBM arrangements can uncover significant cost reduction opportunities that may not be apparent in routine reporting.

Fiduciary Accountability: Working with a PBM that has contractual fiduciary obligations ensures alignment between the institution's financial goals and the PBM's operational practices.

Total Cost Focus: Evaluating pharmacy benefits based on total plan cost rather than individual transaction pricing reveals the true financial impact of PBM relationships.

The Competitive Advantage of Cost Control

For universities competing for top faculty and staff, comprehensive benefits packages are essential recruitment and retention tools. However, rising healthcare costs, including pharmacy benefits, strain institutional budgets.

The $400,000 in projected annual savings represents resources that can be redirected toward:

• Enhanced employee benefits offerings

• Competitive compensation packages

• Educational program investments

• Infrastructure improvements

  
  

Building Sustainable Cost Management

The university's transition to DisclosedRx demonstrates how higher education institutions can reclaim control of their pharmacy benefit costs without compromising member care or access.

By partnering with The Fiduciary and Fully Disclosed PBM ™, the university ensures their pharmacy benefits serve their institutional mission rather than enriching pharmaceutical middlemen. This alignment creates sustainable cost management that supports both fiscal responsibility and employee wellbeing.

The question for other universities is not whether substantial pharmacy benefit savings are possible, but whether they are willing to challenge the status quo to achieve them.

DisclosedRx operates as The Fiduciary and Fully Disclosed PBM™, providing complete pharmacy benefit cost visibility while serving as a contractual fiduciary committed to client success.