What is a Pharmacy Benefits Optimizer?

A Pharmacy Benefits Optimizer is an organization that specializes in advocating in the best interest of employee benefits consultants, their self-funded employer clients, and their members to derive maximum value from pharmacy benefit arrangements.

A PBO acts independently of the pharmacy benefit manager (PBM) and Big Pharma, creating a level playing field for plan sponsors regardless of size, promoting access to affordable prescription drug benefits year-over-year, and advocating in the best economic and clinical interest of plan sponsors and their members.

The relationship between an employer (or payer) and a PBO is managed by that payer’s Employee Benefits Broker, Consultant, or Third-Party Administrator. PBOs emphasize three core areas to improve prescription drug benefit program outcomes beyond what is possible with a standard PBM agreement:

  • Competitive pharmacy contract pricing and drug rebate terms
  • Tailored clinical management programs to ensure appropriate prescription drug utilization
  • Direct member services and quality assurance

Why do PBOs exist?

The pharmacy benefit is highly utilized with more than half of members using their drug plan each year. The costs associated with this critical benefit have skyrocketed over the last 10 years, with as much as $0.30 of every healthcare dollar spent by plan sponsors now going to pharmacy benefits. This trend is expected to continue growing driven primarily by high-cost specialty drugs.

Most prescription drugs brought to market represent medical breakthroughs and priceless treatments, but some simply do not. Drug manufacturers, prescribers, and PBMs each play their own distinct role in drug pricing and utilization, and no one is advocating in the best economic interest of plan sponsors (payers). Prescribers, pharmacists, and PBMs are not responsible for sorting through it all and determine whether a drug is necessary, safe, and cost-effective.

Who’s looking out for the payers best interest?


For employers working hard to compete in a tough economy, the flaws in the pharmacy supply chain are too expensive to ignore. They need an expert advocating on their behalf inside the complex ecosystem. This expert should be able to provide independent oversight and deliver tailored contract and clinical management strategies that align with the best interests of the plan and its members.

What does a PBO do?

PBOs serve as an employee benefit consultant’s go-to pharmacy resource, helping them to identify risks and proactively uncover substantial savings opportunities for their clients. As independent advisors and advocates, PBOs fill the gap in the market and provide greater transparency of each employer’s pharmacy arrangement, clinical programs, and performance.

Specialized Pharmacy Consultations
The PBO’s team of pharmacy experts serve as advisors to help consultants and their clients make the best, most informed decision possible to meet their pharmacy savings and access objectives. PBOs provide pharmacy benefit analyses, recommendations, and strategies tailored to each employers’ specific risk areas and business objectives.

Aggregate Purchasing Power
PBOs harness market-leading purchasing power for all employers, regardless of size, to match that of the nation’s largest employer companies, enabling them to access the most competitive pricing and drug rebates each year.

In-House Clinical Interventions
PBOs utilize pharmacists to provide independent clinical oversight of each employer’s drug utilization trends. They review and manage the appropriateness of therapy and implement targeted clinical interventions with the goal of driving down overall healthcare costs and improving member safety.

In-House Member Services
PBOs provide personalized member support through in-house call centers where representatives are empowered to resolve member issues to achieve the best possible solution, even if that solution involves multiple steps.

What’s the difference between a PBO and a PBM?

A Pharmacy Benefits Optimizer, or PBO, provides payer advocacy and solutions unlike other types of pharmacy benefit partners. Unlike a Pharmacy Benefit Manager or PBM, a PBO acts independently of the key players in the pharmacy eco-system, cutting through their competing priorities to serve in the best interest of payers and members.

PBMs negotiate with drug manufacturers and wholesale distributors to purchase medications at a lower price and receive generous rebates in exchange for giving a drug preferred placement on their formulary. Instead of placing the low-est-priced drug on the formulary and passing the savings to payers, PBMs may implement programs that direct pharmacies to supply the drug with the highest rebate value to boost their profits.

Additionally, many PBMs own their own retail, mail, and specialty pharmacies. They may employ profit maximization strategies that drive utilization – and revenue – to their pharmacies first. These practices can lead to vague and misleading contract terms and limited application of cost-saving benefit design and clinical management strategies, in favor of terms and strategies that are not the most advantageous to payers and members.

As independent administrators of pharmacy benefits solutions, PBOs provide payer-focused contract terms and targeted utilization management strategies that eliminate wasteful spending, promote the lowest cost drugs, and prioritize member safety. Working in partnership with employee benefit consultants, PBOs take a consultative approach to managing pharmacy benefits by providing unbiased analyses and recommendations that put the consultant and the payer in a position to make the best decisions for the pharmacy plan and its members.

Who benefits most from a PBO?

Employee benefits consultants and their self-funded employer clients looking for a trusted pharmacy adviser to maximize the economic and clinical value derived from their pharmacy benefits spend would benefit from a PBO partnership.

PBOs offer consultants an independent alternative to traditional PBM arrangements so that they can provide their clients with a best-in-class benefit at a price they can afford.


Download our free guide.
The Definitive Guide to Optimizing Pharmacy Benefits

This guide explains how to use a data-driven approach, along with industry expertise and best practices, to evaluate and modify your clients’ annual pharmacy benefits plan so that they can achieve lasting savings and maintain affordable pharmacy benefits for their employees. Download Now.

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