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Hiring a Pharmacy Benefit Manager (PBM) is rarely something a company plans years in advance.
Most organizations gradually arrive at that point. Pharmacy costs increase. Employees begin asking more questions about prescription coverage. Leadership wants better reporting. A company reaches a level of maturity where its pharmacy benefits deserve more attention than they received in the past.
The same is true for organizations that already work with a PBM. Relationships that made sense five or ten years ago may no longer fit the business today. Company growth, changing employee demographics, new clinical needs, or rising pharmacy costs can all signal that it is time to reevaluate the market.
The challenge is that many organizations wait until a problem becomes urgent before taking action.
PBMs decide which opportunities are worth pursuing. They look at company size, network requirements, claims data, contract economics, implementation risk, pharmacy benefit needs, reporting expectations, timeline, and whether the opportunity fits their business model.
This is not a step-by-step guide because every business is different and every PBM evaluates potential clients on a case-by-case basis. But keeping the concepts below in mind can make your search for PBM services easier. The more prepared your company is, the more attractive it may become to the PBMs best suited to serve it.
Here are eleven common signs that it may be time to hire a PBM or begin searching for a better one.
Signs You’re Ready to Hire Your First PBM
It Is About Business Maturity, Not Company Size
One of the biggest misconceptions about hiring a PBM is that it is determined by the number of employees in your organization.
In reality, business maturity is often a better indicator than company size.
A rapidly growing company with 100 employees, increasing pharmacy spend, a self-funded health plan, and more complex benefit needs may be ready to evaluate PBM services. Meanwhile, a larger organization with simpler pharmacy benefits may not have reached that point.
The signals in this article should not be viewed as a checklist tied to employee count. Instead, they reflect the overall maturity of your pharmacy benefit strategy, your organization’s operational complexity, and your readiness to manage a more sophisticated pharmacy program.
1. Pharmacy Spending Is Becoming a Meaningful Business Expense
Every business reaches a point where pharmacy benefits become financially significant.
As prescription utilization grows, what was once a relatively small line item can become one of the company’s largest healthcare expenses. Leadership begins asking questions about costs, rebates, specialty medications, and utilization trends.
When pharmacy spending becomes large enough to affect budgeting and long-term planning, it is often time to evaluate whether a dedicated PBM relationship would provide better management.
2. You’re Moving Toward a Self-Funded Health Plan
Greater control also brings greater responsibility. Instead of relying primarily on an insurance carrier, the employer now has more influence over pharmacy benefits, formulary decisions, reporting, and long-term strategy.
Organizations considering this transition can also benefit from educational resources produced by organizations such as the Business Group on Health, which regularly publishes research and guidance on employer-sponsored healthcare and pharmacy benefits.
That additional flexibility often makes direct PBM procurement worthwhile.
3. Employees Expect Better Pharmacy Benefits
Employee expectations have changed.
Workers expect affordable medications, convenient pharmacy access, digital tools, specialty pharmacy support, and responsive customer service.
If pharmacy benefits are becoming a competitive advantage in recruiting and retention, they deserve more strategic attention than simply accepting whatever arrangement already exists.
4. Specialty Pharmacy Costs Continue to Grow
Specialty medications represent a relatively small percentage of prescriptions but often account for a disproportionate share of pharmacy spending.
Organizations experiencing increased specialty utilization should begin asking whether their current benefit strategy is still appropriate.
A PBM with stronger specialty pharmacy management may help the organization better understand utilization, clinical programs, and cost drivers.
5. Leadership Wants Better Data
Many growing businesses eventually ask a simple question:
“Where is our pharmacy money actually going?”
If leadership cannot answer that question with confidence, it may be time to evaluate PBM services.
Modern organizations increasingly want reporting that supports strategic decision making rather than simply documenting historical claims activity.
6. Your Business Has Outgrown Your Current Benefits Strategy
Growth changes everything.
Acquisitions, expansion into new states, increased employee counts, new workforce demographics, or changing prescription utilization all affect pharmacy benefit needs.
The solution that worked five years ago may no longer fit today’s organization.
One of the clearest signs you’re ready to hire a PBM is when your pharmacy benefit strategy no longer reflects the size, complexity, or maturity of your business.
Signs It May Be Time to Replace Your Current PBM
7. Pharmacy Costs Keep Rising Without Clear Explanations
No organization expects pharmacy costs to remain perfectly flat.
However, leadership should understand why costs are changing.
If annual pharmacy spending continues increasing while explanations remain vague or difficult to interpret, it may be time to compare the market.
A competitive evaluation often provides valuable perspective, even if the company ultimately keeps its current PBM.
The goal is not simply to find lower prices. It is to understand whether your current PBM continues to provide the best overall value for your organization.
8. Reporting Doesn’t Help Leadership Make Decisions
Receiving reports is not the same as receiving useful information.
Executives should be able to answer questions such as:
- What is driving pharmacy costs?
- How is specialty pharmacy affecting spend?
- Are guarantees being achieved?
- How are rebates performing?
- What opportunities exist for improvement?
If reporting cannot answer those questions, leadership may not have enough visibility to make informed decisions.
The best PBM relationships provide reporting that supports business strategy rather than simply documenting historical activity.
9. Your Organization Has Changed More Than Your PBM Relationship
Many PBM relationships last for years.During that time, businesses often evolve dramatically. New locations open. Employee populations change. Prescription utilization shifts. Business priorities evolve. Yet the PBM relationship often remains largely unchanged.
Periodic evaluation helps determine whether today’s pharmacy benefit strategy still matches today’s business.
An organization should not assume that because a PBM was the right fit several years ago, it is automatically the best fit today.
10. Your Contract Renewal Is Approaching
One of the biggest procurement mistakes is waiting until shortly before contract renewal to begin evaluating alternatives. Good procurement takes time. Organizations should understand the market, gather claims information, identify priorities, compare available options, and allow sufficient time for implementation planning before existing contracts expire.
Starting early creates options. Waiting until the last minute often reduces them.
Beginning the evaluation process well before renewal gives both your organization and prospective PBMs sufficient time to determine whether the opportunity is a good fit.
11. You Don’t Know Whether You’re Getting a Competitive Deal
Perhaps the most important signal is uncertainty. Many organizations simply don’t know whether their current PBM remains competitive. That does not necessarily mean the existing relationship is poor. It means there is no meaningful benchmark.
Markets evolve. Pricing models change. Service offerings improve. Transparency expectations continue to increase. Sometimes the greatest value of exploring the market is confirming that the current relationship remains the right one. Other times, companies discover opportunities they never realized existed.
You should never have to wonder whether your pharmacy benefits remain competitive simply because you have not looked at the market in years.
Why Companies Wait Too Long
Even when organizations recognize these warning signs, many delay action. Why?
Because evaluating PBMs can feel intimidating.
Leadership assumes they need months of preparation before even beginning the process. They imagine issuing a lengthy Request for Proposal (RFP), coordinating consultants, collecting extensive documentation, and committing significant internal resources before seeing what the market has to offer. That perception alone causes many companies to postpone procurement until circumstances force them to act.
Ironically, waiting usually reduces negotiating flexibility rather than improving it. By the time a company is facing an urgent contract renewal or rapidly increasing pharmacy costs, it has fewer options and less time to carefully evaluate potential PBM partners.
Good procurement is proactive, not reactive.
How PfRs Lower the Barrier to Finding a PBM
Proposals for Requestors (PfRs) were designed to reduce much of the friction that discourages organizations from exploring the PBM market.
A PfR is a vendor-initiated procurement offering made available to qualified requestors through a controlled online marketplace. It is presented using standardized templates rather than custom responses created for a single buyer.
For companies considering whether it is time to hire a PBM, this creates an important advantage.
Instead of beginning with a lengthy custom procurement process, qualified requestors can review structured PBM offerings earlier in their buying journey. They can better understand available pricing models, service capabilities, reporting options, pharmacy networks, specialty pharmacy offerings, implementation approaches, guarantees, and other differentiators before deciding whether deeper procurement work is necessary.
This also benefits PBMs.
Instead of deciding whether every potential client justifies the expense of developing a fully customized response, PBMs can present structured offerings that remain available to qualified requestors over time.
That reduces barriers for both sides. Companies gain easier access to the market. PBMs spend less time responding to opportunities that may never move forward.
As organizations mature, simply understanding what the market has to offer can become just as valuable as conducting a formal procurement process.
The Best Time to Evaluate Your PBM Is Before You Have To
Organizations rarely regret beginning the conversation early. They often regret waiting until rising pharmacy costs, employee dissatisfaction, contract deadlines, or major organizational changes force them to act under pressure. Whether your company is preparing to hire its first PBM or evaluating whether your current relationship still fits your business, recognizing the warning signs early gives leadership more time, more options, and ultimately better decisions.
The goal is not simply to change vendors. The goal is to ensure your pharmacy benefits continue supporting your employees while remaining aligned with your organization’s long-term business objectives.
Good procurement begins long before an RFP is ever written. Sometimes it simply begins by recognizing that your business has reached a new stage of maturity.
Finding the right PBM should not feel prohibitively difficult simply because your company has grown. As organizations mature, they deserve procurement methods that make understanding the market easier, comparisons clearer, and decisions more informed.
That is one of the promises of PfRs.
Whether your organization is preparing to hire its first PBM or considering a change, understanding the market before launching a lengthy procurement process can save significant time and effort.
Rapid Request’s structured Proposals for Requestors (PfRs) help qualified requestors explore standardized PBM offerings earlier in the buying journey, making comparison simpler before committing to a full procurement initiative.
How do I know when it’s time to hire a PBM?
Companies often begin evaluating PBMs when pharmacy spending becomes significant, they move toward a self-funded health plan, specialty pharmacy utilization increases, leadership wants better reporting, or employee expectations outgrow their current pharmacy benefit strategy.
Does a small business need a PBM?
Not every small business needs a direct PBM relationship. The decision depends more on pharmacy benefit complexity, prescription spending, employee needs, and organizational maturity than employee count alone.
How often should a company evaluate its PBM?
Many organizations benefit from periodically reviewing the market, particularly before contract renewals, after significant business growth, or when pharmacy costs or reporting concerns begin increasing. Historically, many PBM relationships have been reevaluated approximately every three years. More recently, however, some organizations are shortening that cadence to every one to two years as pharmacy pricing, transparency expectations, regulatory developments, and market offerings continue to evolve. Even if a company ultimately retains its current PBM, regular market evaluations can help ensure it remains competitive.
Should I replace my PBM if costs increase?
Not necessarily. Rising pharmacy costs alone do not automatically indicate poor PBM performance. However, organizations should understand why costs are changing and periodically compare available options to ensure their current arrangement remains competitive.
How do PfRs help companies looking for a PBM?
PfRs allow qualified requestors to review structured, vendor-initiated PBM offerings before launching lengthy custom procurement efforts. This reduces barriers to market exploration while making PBM comparison faster and more efficient.