Health Plan Drug Management Transformation: Redesigning a $2B Drug Spend for Strategic Growth
This is an AArete Healthcare Payer insight
The Challenge
A mid-sized health plan serving more than 500,000 members across multiple lines of business launched an ambitious transformation to become a market leader. Drug benefit redesign was a critical lever to achieving several interconnected goals.
Despite spending more than $2 billion annually on pharmacy benefits, the organization struggled with transparency issues, rising costs, and misalignment between its pharmacy benefit manager (PBM) model and long-term strategic vision. To address these issues, the health plan engaged AArete to rethink the financing, design, and delivery of drug benefits.
Our Approach
AArete led the organization’s senior leadership teams through a series of collaborative design thinking workshops over 12 weeks. These sessions explored key challenges in the existing PBM model, including contractual complexity, transparency, and conflicts of interest.
Using proprietary market intelligence, financial modeling, and stakeholder input, AArete performed a comprehensive assessment across operations, finance, and strategy. The objective: develop a scalable, unbundled pharmacy benefits model to gain control, lower costs, and support the plan’s vision of person-centered care.
The Results
AArete’s work culminated in the development of a comprehensive drug benefit transformation strategy and an 18-month implementation roadmap. This included:
- A clearly defined drug benefit vision aligned with enterprise strategy
- A plan to transition away from a traditional full-service PBM model to gain greater control and flexibility, better manage drug trend and support an improved member experience
- Financial proforma and supporting documentation for leadership and governing board
Deliverables included board-ready presentations, cost models, and decision-making tools that enabled the organization to move forward confidently with a drug management transformation strategy.
With a focus on person-centered care and long-term sustainability, the organization is now positioned to lead the market in delivering healthcare value.
Opportunities Ahead
The strategic foundation is now in place for the health plan to redesign the financing, design, and delivery of drug benefits—paving the way for measurable improvements across clinical, quality, costs, and member experience.
As planning and implementation begins, the organization has a unique opportunity to move beyond legacy PBM practices and build a pharmacy program that truly puts members first. By re-evaluating their PBM functions, health plans can optimize each component on their own terms with greater visibility and control.
This transformation is especially timely as legislation like the One Big Beautiful Bill Act (OBBBA) stands to reshape health plan enrollment and cost structures. To stay ahead, health plans must take a proactive approach to drug benefit innovation. AArete continues to guide organizations through this evolving, post-OBBBA environment – offering strategic support across vendor selection, cost containment, contracting, and operational governance – to help health plans build sustainable, member-centric pharmacy programs that optimize value to align with broader enterprise goals.
