Trust, But Verify: Why “Market Competitive Pricing” Tells You Nothing
Today’s post starts with a principle every fiduciary knows but not everyone follows: Trust, but verify.
In workers’ comp pharmacy, that principle matters most when your PBM say “your pricing is market competitive.” It sounds reassuring, even analytical, like someone has done the math.
But in today’s PBM environment, that phrase often tells you less than you think — and sometimes nothing at all. Because many payers are still fighting yesterday’s war, using yesterday’s metrics, against a pricing model that has already moved on.
And when the battlefield changes, trust alone isn’t enough. You have to verify. You Must!
The War Buyers Think They’re Fighting
For years, pharmacy contracts were judged by a familiar checklist:
Bigger discounts off AWP
Tighter prior authorization rules
More utilization edits
More clinical criteria
More reporting
More portals
More workflow
The assumption was simple:
If the discounts are deeper and the controls are tighter, the program must be better.
And for a long time, buyers trusted that logic.
But trust only works when the underlying system is honest.
When pricing itself becomes engineered, the old scorecard stops working — and “market competitive” becomes a phrase you should verify, not accept.
The Illusion of the Discount
One of the oldest tricks in PBM pricing is also the easiest to miss.
Raise the starting price high enough…
and you can offer any discount you want.
Investigations over the past several years — including federal cases involving large PBMs and their affiliated pharmacies — have shown examples where:
Average Wholesale Prices (AWPs) were inflated by over 1000%
The PBM then applied a “discount”
The payer was told they were receiving market-leading pricing
On paper, everything looked competitive.
In reality, the price was still far above what the drug actually cost.
This is exactly where trust but verify matters.
Because if the benchmark itself is distorted, comparing discounts inside that benchmark tells you nothing. You can trust the report. You can trust the contract. You can trust the dashboard.
But if you never verify how the price was built, you may be trusting the illusion.
When Clinical Rules Apply… Except When They Don’t
Another place where buyers often rely on trust is clinical oversight.
Prior authorizations
Step therapy
Quantity limits
High-level review committees
Clinical leadership teams
Complex approval workflows
All of it sounds like protection. And sometimes it is. But in multiple cases — including issues raised in recent federal litigation — PBMs have been accused of:
Enforcing strict criteria at outside pharmacies
Relaxing or bypassing criteria when prescriptions ran through pharmacies they owned
Steering volume internally where prices were higher
From the outside, the payer still saw: strong clinical programs, detailed reporting, sophisticated portals, “market competitive pricing,” everything looked controlled, and everything looked verified.
But the incentives underneath were never aligned. That’s the problem when the system depends on trust without transparency. You don’t notice the difference until the cost shows up.
Complexity Can Look Like Control
Modern PBM programs often come with everything you would expect from a sophisticated platform:
Real-time dashboards and custom reporting portals
Performance metrics, fee schedules and rebate guarantees
Clinical reviews and specialty pathways
Workflow approvals, exception tracking and network tiers
It feels advanced. It feels like oversight. It feels like someone is watching everything. And buyers naturally trust that more complexity means more control. But complexity can also make verification harder.
The more layers there are between the prescription and the price,
the easier it becomes to hide how the money actually moves.
That’s why “market competitive pricing” is not a verification. It’s a description. And descriptions are easy to engineer.
Payers (Buyers) Are Still Fighting Yesterday’s War
Most RFPs still ask the same questions they asked ten years ago: what is your AWP discount? What is your rebate guarantee? What are your clinical edits? How does your network compare to the market?
Those questions assume the game is about percentages. The current game is about structure. It’s about: who sets the starting price, who owns the pharmacy, who keeps the spread, who controls the data, who decides when rules apply, and who benefits when the drug costs more.
If those incentives aren’t aligned, no discount can fix it.
You can trust the contract. You can trust the guarantees. You can trust the presentation. But if you never verify the model, you may still lose.
The Market Is Starting to Verify
You can see the shift happening. Recent FTC actions against large PBMs and their affiliated entities have focused less on discounts — and more on structure:
Pharmacy steering
Rebate arrangements
Conflicts of interest
Lack of transparency in how prices are set
The details will continue to play out. But the signal is clear. The conversation is moving awayfrom: How big is the discount?
and toward: How does the model actually make money?
That’s the question buyers should have been verifying all along. Because fiduciary responsibility isn’t about trusting the system. It’s about making sure the system deserves trust.
Occam’s Razor for PBM Pricing
There’s a principle in science called Occam’s Razor.
The simplest explanation is usually the right one.
In pharmacy pricing, that principle works surprisingly well.
If the model requires:
Ten portals
Five committees
Three pricing formulas
Two rebate reconciliations
And a 40-page contract
…just to understand how the PBM gets paid, then the answer probably isn’t simple. And if the answer isn’t simple, it probably isn’t aligned.
So here’s the verification test.
Ask your PBM one question:
In ten words or less, how do you make money on my program?
If the answer is clear, direct, and easy to explain, your pricing might actually mean something.
If the answer requires a presentation… Then “market competitive” probably isn’t verification. It’s just trust. And in today’s PBM market, trust without verification is the most expensive mistake you can make.
As I’ve said before, clarity is no longer optional. It is the rule. If you still cannot get clarity from your PBM, that’s where I come in. Contact me, I’m here to help.
— DEL
About P4P
A Strategic Dose of Clarity in a Noisy PBM Market
Written by Prodigy CEO, Del Doherty, P4P delivers sharp, consultative insights for decision-makers who are tired of legacy models, hidden costs, and passive vendors. Each piece is a prescription—cutting through the noise to reveal what actually drives performance in pharmacy benefit management. No fluff. No spin. Just insight that pays off.
