Contract variance vs. systemic integrity: why the difference matters in pharmacy benefit oversight

Pharmacy benefit oversight is getting more attention than ever. Rising drug costs, high-profile enforcement actions, and the surge of GLP-1 therapies have health plans and employers asking: Are we really paying claims the way we should be? 

The answer often comes down to two different — but sometimes confused — approaches: contract variance and systemic integrity. 

What is contract variance? 

Contract variance oversight asks a straightforward question: Did the pharmacy benefit manager (PBM) follow the deal we signed? 

It focuses on whether claims were paid in alignment with contract terms. For example: 

• GLP-1 coverage: If the contract says GLP-1 drugs are only covered for Type 2 diabetes, but claims were paid for weight-loss use, that’s a contract variance. 

• Lesser of logic: If the contract requires the PBM to always apply lesser-of pricing, but that rule was ignored, that’s a variance. 

• Rebate guarantees: If the PBM promised a certain rebate level and fell short, that’s another example. 

Contract variance is valuable because it ensures accountability to the promises made in writing, but it only goes as far as what’s captured in the four corners of the contract. 

What is systemic integrity? 

Systemic integrity oversight goes deeper: Was each claim paid accurately according to pricing rules, clinical edits, and benefit logic — regardless of what the contract says? This type of monitoring looks at how claims are actually processed in real time. It catches breakdowns that may not be explicitly spelled out in a contract but still drain budgets.  

Examples include: 

• GLP-1 prior authorization consistency: Even if diabetes coverage is correct on paper, some claims may bypass prior authorization checks, leading to inappropriate payments. 

• Lesser of logic misfires: The clause exists in the contract, but if it’s coded incorrectly for certain drugs or pharmacies, a subset of claims still gets overpaid. 

• Coordination of benefits (COB): Secondary coverage might be recognized for some carriers but missed in edge cases — a systemic issue that creates leakage. 

• Duplicate therapy or early refills: A patient receives overlapping prescriptions or fills too soon. Even if not mentioned in the contract, it’s a clear integrity problem. 

Systemic integrity oversight is about ensuring the day-to-day accuracy of every claim, not just annual compliance with contract guarantees.

Why the distinction matters 

Think of it this way: 

• Contract variance is the scorekeeper: did the PBM stick to the written playbook? 

• Systemic integrity is the referee: was every play run correctly and fairly in real time? 

Both are important. But without systemic integrity, health plans and employers are often left reacting after dollars have already leaked. 

The future of pharmacy oversight 

As pharmacy costs accelerate, especially with GLP-1s, gene therapies, and high-cost generics, continuous monitoring that blends contract compliance with systemic integrity is quickly becoming the gold standard. Plans and employers that can spot both contract variance and operational breakdowns will be in the best position to protect budgets and members alike.