Why January is the Right Time to Evaluate Your Pharmacy Benefits

As you settle into the new year, pharmacy benefits probably aren't top of mind. But if you're thinking about making changes to your PBM at any point this year, the clock is already ticking.

Here's the reality: most pharmacy benefit managers (PBMs) need at least 90 days to implement a new contract. That's three full months just for setup.

The Contract Timing Problem

Let's walk through what typically happens. Your broker shows up in late summer or early fall with renewal options for next January 1st. You decide you want to explore other PBM options.

But here's what many employers don't realize until it's too late:

Your current contract likely has a notification requirement. These clauses can require anywhere from 30 days to over a year of advance notice before you can switch providers.

Early termination can cost you. If you have employees on high-cost medications that generate substantial rebates, those rebates typically flow through on a quarterly schedule. Your PBM contract may include provisions that allow them to withhold these rebates if you terminate early. We're talking about potentially hundreds of thousands of dollars.

Implementation takes time. Even after you've cleared the notification hurdle, you still need those 90 days minimum for your new PBM to get set up properly.

When you add it all up, what seemed like plenty of time in August becomes a scramble by October. And rushed implementations create real problems for your employees. Cards don't arrive on time. Pharmacies can't process claims. Your people end up stuck at the counter when they need their medications.

Starting in January Changes the Math

This is why January matters. Starting your evaluation now gives you the breathing room to do this right.

Pull out your current PBM contract. Look for the notification clause and any termination provisions. Know exactly what you're working with.

Understand your rebate structure. If you're considering terminating mid-contract, factor in any rebates you might forfeit.

Build in real timelines. If you want changes effective January 1st next year, work backwards. Add 90 days for implementation. Add your notification period. That's when you need to make your decision.

Making Changes That Actually Work

We've seen what happens when employers feel pressured into hasty transitions. The financial benefits might look good on paper, but if your employees can't access their prescriptions when they need them, you've created a bigger problem.

The point isn't to rush into changes for the sake of changing. It's to give yourself enough time to make informed decisions and implement them properly.

If you're wondering whether your current pharmacy setup is serving your organization well, this is the time to take a look. You have the months ahead to do the analysis, understand your contract obligations, and make choices that actually work for your team.