Transparent PBM: How to choose a fiduciary partner.

Employers spend billions on pharmacy benefits every year, with limited visibility into where that money goes. Rebates retained by the pharmacy benefits manager (PBM), spread pricing baked into every claim, formulary decisions driven by manufacturer relationships—these are not edge cases in the traditional PBM model. They are features of it.

The industry response has been a push toward transparency. Transparent PBMs promise better reporting, rebate disclosure, and cleaner contracts. That is progress. But transparency alone does not fix misalignment. The standard employers should be demanding goes further: a fiduciary-aligned PBM whose financial model is structurally incapable of benefiting from your spend.

This guide explains the difference between these models, what to look for when evaluating partners and how to build contracts that hold your PBM accountable.

Key highlights:

• A transparent PBM discloses pricing and passes through rebates, but transparency is a reporting standard, not a structural guarantee of alignment.
• Fiduciary-aligned PBMs go a step further by operating with a single flat fee as their only revenue source, eliminating every financial arrangement that creates a conflict of interest.
• Evaluating a fiduciary PBM partner requires examining structure, not just language. Ownership, compensation model and formulary independence matter more than what the contract calls itself.
• Rightway operates as a fully fiduciary-aligned PBM with 100% rebate pass-through, zero spread pricing and claim-level reporting.

What is a transparent PBM?

A transparent PBM is a pharmacy benefit manager that discloses pricing, passes through rebates and discounts to the plan and gives employers cleaner visibility into how their pharmacy dollars are spent. Compared to the traditional model, this is meaningful progress. Employers can see more, audit more and understand more about where their money is going.

However, visibility is not the same as alignment. A transparent pharmacy benefits manager can show you every dollar it retains and still retain dollars. That is the ceiling of what transparency alone delivers—and why fiduciary alignment exists as a distinct, higher standard.

What defines a transparent PBM model?

Transparency in the PBM market shows up across several financial and operational dimensions. The table below outlines the core elements and why each one matters. These are the baseline standards employers should expect from any solution that calls itself transparent.

How to select a fiduciary PBM partner.

Transparent PBMs are a meaningful step up from the traditional model. But if the goal is to find a partner who cannot profit from complexity, transparency is the starting point, not the destination.

Here is how to evaluate whether a PBM has made the full structural commitment to fiduciary alignment.

1. Validate fiduciary commitment and conflict-free structure.

Fiduciary responsibility means the PBM is obligated to act in the plan's best interest. A transparent solution discloses what it does. A fiduciary partner is structurally prevented from doing things that conflict with plan sponsor interests. Those are different standards, and only one of them removes the underlying conflict.

When evaluating fiduciary commitment, examine the structure, not the language. A PBM that owns specialty pharmacies, retains manufacturer rebates, or generates revenue from spread pricing cannot be fully fiduciary-aligned regardless of what the contract says. The financial model either creates conflicts or it does not.

Before signing anything, get clear answers to the following:

• Ask directly: Does the PBM own any pharmacies or distribution entities in the supply chain?
• Confirm that all manufacturer rebates and administrative fees flow 100% to the plan
• Verify that PBM compensation is limited to a single disclosed administrative fee
• Require a written fiduciary acknowledgment, not just a verbal commitment

2. Understand how the PBM makes money.

This is the most important question an employer can ask, and most never do. Traditional pharmacy benefits managers generate revenue from multiple sources: spread pricing on generic drugs, retained rebates, manufacturer administrative fees and PBM-owned pharmacy revenue.

Transparent PBMs disclose more of this. A fiduciary-aligned PBM eliminates it.

A pharmacy benefits manager operating under a true fiduciary model has one revenue source: the flat administrative fee the employer agrees to pay. Every other form of income is either eliminated or passed through entirely to the plan. If a vendor cannot clearly answer how it makes money, that is the answer.

Push for complete financial disclosure by asking for the following:

• Request complete disclosure of all revenue streams, including those not traditionally disclosed
• Ask specifically: Does the PBM receive any compensation from manufacturers beyond disclosed rebates?
• Confirm how generic drug pricing is handled, whether AWP-based, MAC-based, or actual acquisition cost
• Certify that no revenue is retained from any source other than the administrative fee

3. Ensure full transparency into pricing, claims and reporting.

Transparent reporting is the foundation that makes fiduciary alignment verifiable. Without it, even a structurally clean model cannot be independently confirmed. Claim-level pricing visibility, near-real-time reporting access and reporting that reflects actual net cost rather than gross spend before rebates are all non-negotiable.

Transparent PBM solutions show employers what was dispensed, what was paid and what came back at the individual claim level. That is meaningfully different from a quarterly rebate check with a one-page summary. Without claim-level data, there is no way to verify alignment in practice.

When evaluating reporting capabilities, confirm the following:

• Confirm access to claim-level data, including ingredient cost, dispensing fee and rebate detail
• Require reporting that shows gross cost and net cost side by side
• Ask how quickly financial reports are available after the close of each month
• Establish contractual requirements for reporting format, frequency and level of detail

4. Evaluate clinical and drug formulary decision independence.

Formulary design is where misaligned incentives become most consequential. Traditional PBMs place drugs in tiers based in part on rebate revenue, meaning higher-cost branded drugs may be preferred over lower-cost alternatives because they generate more income. Transparent PBMs may disclose this. Fiduciary-aligned PBMs eliminate the financial relationship that creates it.

A truly independent drug formulary is built around clinical evidence and net cost. This is only possible when the PBM has no manufacturer-derived revenue to protect. Formulary independence is not a feature a transparent model can layer on. It requires a model that was never financially entangled with manufacturers in the first place.

To assess true formulary independence, ask the following:

• Ask who controls formulary design and what criteria drive tier placement
• Require disclosure of any manufacturer payments tied to formulary position
• Confirm biosimilar and generic substitution policies are based on net cost, not rebate modeling
• Evaluate whether conflict-free formulary management is standard or an optional add-on

5. Look for measurable accountability and member outcomes.

A fiduciary-aligned PBM should demonstrate its impact, not just describe it. Member benefits understanding, generic dispensing rates, adherence metrics and copay assistance enrollment rates are all measurable.

The clinical model behind the PBM matters as much as the financial one. A fiduciary-aligned model with a strong pharmacy care team does more than process claims—it proactively guides members to the right medications at the lowest net cost. That means clinical pharmacists reaching out when a lower-cost therapeutic alternative is available, navigating prior authorizations, enrolling eligible members in copay assistance programs before they abandon a prescription and supporting adherence for members managing chronic conditions.

When evaluating clinical performance, request documented evidence across these areas:

• Ask for generic dispensing rate averages across the book of business
• Ask what percentage of members on high-cost specialty medications are enrolled in copay assistance programs
• Confirm whether clinical outreach is proactive or reactive and whether it is handled by licensed pharmacists or general support staff
• Ask how the PBM measures medication adherence and what interventions are in place when adherence falls below clinical thresholds

Benefits of transparent PBMs.

Moving from a traditional PBM to a transparent model delivers better visibility. Moving to a fiduciary-aligned model delivers structural change. The benefits below reflect what full alignment, not just disclosure, actually produces.

• Lower and more predictable pharmacy spend: When the PBM's only revenue is a flat administrative fee, there is no financial incentive to drive higher drug spend. Rebates flow directly to the plan, spread pricing does not exist and total pharmacy spend falls.
• Greater control over pharmacy benefit decisions: Claim-level visibility and independent formulary management return decision-making authority to the plan sponsor. With a fiduciary-aligned model, the PBM has no financial stake in those decisions, which means its recommendations can be trusted.
• Improved visibility into drug pricing and utilization: Transparent PBMs provide better reporting than traditional ones. Fiduciary-aligned partners provide reporting that can be fully independently verified, because there is nothing in the financial model that creates an incentive to obscure it.
• Alignment between cost and member outcomes: When the financial incentives are right, the clinical focus follows—and that shows up in medication adherence rates, specialty copay assistance enrollment and members who are actually getting the care they need at a cost they can sustain.
• Increased trust and accountability: Transparency builds trust by showing you more. Fiduciary alignment earns trust by removing the reasons not to trust. When the financial model cannot profit from complexity, the relationship is genuinely different.

How to ensure transparency in PBM contracts.

Transparency has become one of the most overused terms in the pharmacy benefits market. More PBMs are claiming it. Fewer are delivering it. The gap between what is promised in a sales conversation and what is actually written into a contract is where employers lose money year after year.

Here’s how employers can ensure transparent PBM contracts with fiduciary alignment:

1. Define transparency requirements upfront.

Before entering negotiations, document exactly what transparency means: specific, measurable, non-negotiable requirements. A partner that agrees to transparency without defined parameters has agreed to very little. Without a clear baseline, PBMs can satisfy transparency language with partial disclosure and narrow definitions that technically comply while obscuring material financial information.

Employers can ensure contract transparency by:

• Defining transparency in terms of specific deliverables: claim-level data, rebate detail and fee disclosure
• Specifying what information is required, at what frequency and in what format
• Building these definitions into the RFP language so they are evaluated consistently across all respondents

2. Require full rebate and discount pass-through in writing.

"100% rebate pass-through" sounds unambiguous. In practice, transparent PBMs may define rebates narrowly, excluding manufacturer administrative fees and other payments that function as rebates but are classified differently. If the contract does not define what is included, the partner defines it.

To ensure rebate dollars are actually passed back, you should:

• Require the contract to define rebates to include all forms of manufacturer compensation
• Confirm that the pass-through applies at claim settlement, not at a reconciliation period that favors the PBM
• Specify that undisclosed forms of manufacturer compensation constitute a material breach

3. Eliminate spread pricing and hidden revenue streams.

Spread pricing occurs when a PBM charges the employer more for a drug than it pays the pharmacy. It is one of the most common hidden revenue streams in traditional PBM contracts and one of the hardest to detect without claim-level data. Transparent PBMs may disclose it. Fiduciary-aligned partners prohibit it. The contract should reflect which standard you are holding your PBM to.

If you want to ensure your PBM does not engage in spread pricing, you should:

• Ensure the contract explicitly prohibits spread pricing on all claim types, including generics
• Confirm that the amount billed to the employer equals the amount the PBM reimburses the pharmacy, with no markup between the two
• Require disclosure of any revenue stream that creates a difference between employer cost and pharmacy payment

4. Establish clear audit rights and reporting standards.

Audit rights are the enforcement mechanism for every other transparency commitment. Without independent verification rights, the employer's only evidence of performance is what the PBM chooses to report. Transparent solutions may offer audit access. Fiduciary-aligned PBMs with built-in audit rights make it a contractual standard, not a negotiated exception.

Employers that want to ensure transparent reporting must:

• Confirm audit rights cover all claim types, manufacturer payments and administrative fee calculations
• Specify that audits can be conducted by an independent third party
• Require a defined response window for audit data requests

5. Align fees with performance and outcomes.

A fiduciary-aligned PBM charges a single flat administrative fee. But a complete contract goes beyond fee structure by establishing what that fee is expected to deliver. Performance guarantees, savings benchmarks, and clinical outcome standards create accountability that persists beyond implementation and give employers recourse if the PBM falls short.

When reviewing a PBM contract, make sure it includes the following performance provisions:

• Negotiated guaranteed minimum savings benchmarks
• Defined clinical performance standards, including generic dispensing rate and adherence metrics
• Service level agreements that include financial consequences for material performance failures

6. Scrutinize formulary decision-making and incentives.

Formulary construction should be governed by clinical evidence and net cost. A transparent contract specifies how decisions are made, who makes them and what financial arrangements exist between the PBM and manufacturers. A fiduciary-aligned contract goes further by prohibiting those arrangements with manufacturers entirely. If a pharmacy benefits manager will not disclose them, that is a signal about which model you are actually dealing with.

To ensure your drug formulary is aligned with your plan’s best interests:

• Require disclosure of any manufacturer payments tied to formulary placement
• Confirm the formulary can be independently audited for clinical appropriateness
• Specify that formulary changes must be disclosed with advance notice and supporting rationale

Get transparent pharmacy spending with Rightway.

Rightway PBM is built around one principle: the pharmacy benefits manager should make money when you save money, not when you spend more. Most solutions are transparent about how they profit from complexity. We remove the complexity entirely. That is the difference between a transparent PBM and a fiduciary-aligned one. Rightway is both.

Here is what employers get with Rightway:

• 100% rebate pass-through, meaning every manufacturer rebate goes directly back to you with claim-level accounting
• Zero spread pricing, so there is no hidden margin between what you pay and what the pharmacy receives
• Flat administrative fee, which is Rightway's only revenue source, disclosed upfront and fixed for the contract term
• SureSpend™ precision pricing guarantee, a contractual ceiling on total annual drug spend, with a 100% refund if actual spend exceeds the guarantee

Book a demo today and see how the Rightway transparent PBM model can help your organization take control of healthcare benefit costs.