International Beverage Distribution

How an International Beverage Distribution Company Reduced PMPM Costs by 27% Thanks to Gallagher and SmithRx

Large PBMs have traditionally focused on discounts as their strategy for saving employers on their pharmacy spend. When a Utah-based beverage producer, seller, and distributor found their drug costs increasing year-over-year, they turned to their partners in Gallagher's Salt Lake City office to help them contain the problem. Gallagher's experience with SmithRx across their book of business had been positive, but would the same be true for the distributor’s extensive 12,000+ member network?

After thorough examination, Gallagher and the client decided to work with SmithRx and the results have been tremendous. By switching to SmithRx’s cost-based approach after a recommendation from Gallagher, the company was able to significantly reduce per member, per month (PMPM) costs and improve employee benefits.

The Challenge: Legacy PBM Pricing Hinders Benefits Goals

The beverage distribution company was using one of the big three PBMs, which utilized a legacy discount-focused approach. The problem with this approach, though, is that every decision is centered around the biggest discount — not the best price. 

To illustrate the issue with this, let’s say you’re shopping for a gallon of milk. If a $12 gallon of milk is discounted 50%, you’ll pay $6. That sounds like a great deal…until you see that there’s a different brand of milk that’s selling for a flat $5 per gallon with no discount. Even though you’re getting the best discount, you’re still paying more than you need to. And when you have thousands and thousands of employees, that difference really adds up. 

It became clear that discount-based strategies were limiting the company’s ability to grow and reach its benefits goals.

The Solution: SmithRx and Connect 360 Help Uncover Cost Savings Opportunities

To help the distributor address the issues arising from legacy pricing models, local Utah-based broker Gallagher advised the company to switch to SmithRx and its cost-based approach. 

A major part of this coordinated effort was conducting a claims analysis and repricer on the existing plan. 

In particular, Gallagher and SmithRx identified several cost savings opportunities within SmithRx’s suite of Connect 360 programs that are proactively offered to members. These include Access Plus, diabetes non-insulin (DNI), low-cost insulin, international sourcing, and more. 

Connect 360 also offers a flat PMPM fee for all of its programs, which contributed to reducing the company’s net cost to the plan. 

The Results: Cost-Based Models Lead to Significant Cost Savings

Ultimately, the collaboration between the distributor, Gallagher, and SmithRx proved to be an incredible success.

When it came to Connect 360 Programs that could help lower costs, SmithRx's autoimmune program stood out: in the first quarter of 2024 they already saved over $230k+. And in just the first year with SmithRx, the company saw over $2.7 million in savings total. Their PMPM cost also dropped from $66 to $48 — a reduction of 27% from its legacy PBM. 

And these savings aren’t just for the employer — these savings have been passed down to the company’s 7,200+ associates and their families so they can benefit from more cost-effective plans. Thanks to SmithRx’s cost-based models, they were able to break free of the trap of discount-based savings and offer a better benefits experience for all of its employees. 

Want to see how SmithRx can save you money, too? Get started with a repricing analysis.