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

Pharmacy benefit manager (PBM) 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 essential because it ensures accountability to the written agreement, but it only covers what is explicitly captured in the contract.

Most plans stop here because contract variance feels concrete. The numbers are measurable, the findings are defensible, and responsibility is clear. But contract variance rarely reflects how claims actually behave inside PBM systems. A contract can be airtight and still allow operational issues that quietly drain dollars every day.

Variance reviews also tend to happen infrequently: quarterly, semiannually, or annually. That cadence allows months of drift or error to accumulate before anyone knows to look.

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 is about ensuring the day-to-day accuracy of every claim, not just annual alignment with contract guarantees.

This is where the majority of avoidable spend hides. PBM platforms are complex, layered environments. Rule engines, clinical edits, price files, external data sources, override codes, and plan-level customizations all interact. When even one component is misaligned, it may not violate the contract, but it absolutely affects payment accuracy.

Systemic integrity also uncovers patterns that variance alone will never surface. These include pharmacy-level behavior anomalies, recurring misconfigurations tied to specific NDCs, inconsistencies in prior authorization enforcement, or shifts in adjudication logic after a PBM system update. These issues are not technical edge cases. They meaningfully influence financial performance.

Unlike variance reviews, systemic integrity requires continuous monitoring because system behavior changes constantly as pricing files update, benefit plans renew, claims volume shifts, and new therapies enter the market.

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, plans are often left reacting after dollars have already leaked.

That leakage is rarely small. Across the plans we meet, systemic issues often account for the majority of avoidable spend. This is not because someone intentionally violated the contract. It is because day-to-day adjudication logic drifted from the intended design.

Variance tells you whether the PBM kept its promises. Systemic integrity tells you whether the underlying systems ever had a fair chance to deliver on those promises.

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 detect both contract variance and operational breakdowns in real time will be in the strongest position to protect budgets and members.

The next wave of oversight is not episodic auditing. It is live, algorithmic, always-on integrity monitoring that identifies issues as they emerge, not months after the fact.

Organizations that adopt this model early will gain clearer insight into their true trend drivers, strengthen PBM alignment, and prevent costly system drift before it affects members or budgets. Those that wait will continue discovering issues only after dollars are gone and often unrecoverable.