Projected Savings vs. Realized Savings: What Employers Should Ask

A pharmacy report can show a large savings number and still leave the most important question unanswered:

Did the plan actually save the money?

4 Min read
September 16, 2026

Evan Spitulnik

Vice President, Enterprise Analytics

Best Practices

Employer reviewing a pharmacy benefits savings report showing projected and realized savings

The figure may represent an opportunity, an avoided cost, a contractual guarantee, an annualized estimate, or a result that has already occurred. Each can be useful. They do not mean the same thing.

Mercer found that 77% of large employers consider measuring health-program performance an important priority over the next three to five years.¹ PwC recommends that health plans set clear targets, hold vendors to meaningful outcomes, and stop funding programs that cannot show avoided utilization or measurable savings. PwC says self-funded employers can apply the same discipline by connecting vendor oversight to claims experience and trend reduction.²

Employers need to know what kind of number they are seeing, how it was calculated, and what decision it should support.

Projected opportunity

A projected opportunity estimates what a plan might save if a specific action occurs.

An analysis may identify members using a higher-cost therapy when a clinically appropriate lower-cost option is available. The estimate shows the potential difference if eligible members complete the change.

That information can help an employer decide where action may be worthwhile. It is not yet a saving.

Some members may not qualify. A prescriber may select another approach. The price may change. The intervention may not be completed.

A projection is most useful when the assumptions are clear, the required action is defined, and the result is tracked later.

Avoided cost

An avoided cost estimates spending that likely would have occurred without an intervention.

A prior authorization may prevent use of a therapy that does not meet the plan’s clinical criteria. A clinical review may identify duplicate treatment. A member may move to a more appropriate site of care.

These actions can create meaningful value. The calculation still depends on a fair comparison.

Was the original claim likely to be paid? Did another therapy replace it? Did cost move to the medical benefit? Was the amount based on list price, contracted price, or final net cost?

An avoided cost estimate is only as credible as the assumptions behind it.

Contractual guarantee

A guarantee is a commitment tied to a defined measure, such as rebates, discounts, claims accuracy, service performance, or trend.

Guarantees create accountability. They do not always show the full financial or member result.

The penalty for missing a target may be much smaller than the financial effect on the plan. A PBM also may meet every contractual guarantee while the employer still experiences unfavorable trend, access problems, or poor service.

The employer should understand what the guarantee measures, what is excluded, how the baseline was set, and what happens when the target is missed.

A guarantee is part of the evidence. It is not the complete performance story.

Annualized estimate

Annualization extends an observed result over a longer period. It does not prove that the full-year saving occurred.

Suppose a completed therapy change lowers cost by $10,000 over three months. Extending that result across 12 months produces an annualized estimate of $40,000.

That estimate may help with forecasting. It should not be reported as $40,000 already saved.

The member may stop therapy. Utilization may change. Prices may move. The intervention may have begun partway through the year.

Annualized figures should be labeled clearly and reconciled against actual experience later.

Realized savings

Realized savings reflect a measured financial difference after a completed action, using a baseline and methodology defined before the result is known.

A credible calculation should show:

The starting baseline
The completed action
The amount paid afterward
The measurement period
The treatment of rebates, fees, and other payments
Any cost that moved elsewhere

It should also explain what changed for the member.

Realized savings do not require perfect information. They do require a clear method and an honest explanation of what is known, what is assumed, and what falls outside the measurement.

The employer should be able to test the calculation.

Plan and member savings are different

A formulary change may lower the plan’s final net cost while increasing the member’s copay.

An affordability program may lower the member’s cost while changing what counts toward the deductible. A cash or alternative purchasing channel may lower the member’s cost while moving the prescription outside the plan’s usual claims data.

Employers should see plan and member results separately.

That allows them to evaluate cost and prescription care together instead of assuming that an improvement for one automatically created an improvement for the other.

Clinical measures need clear labels, too

The same discipline applies to clinical and member-support programs.

A member identified is not necessarily a member reached. A member reached is not necessarily a member engaged. A barrier identified is not a barrier resolved. A therapy recommended is not a therapy changed.

Each measure can be useful. They describe different stages of the work and should be reported that way.

A completed prior authorization also does not prove that the member received the prescription. A paid claim does not show whether the member understood the treatment, could afford the refill, or remained on therapy.

The measure should match what the evidence demonstrates.

Follow the number from opportunity to result

Better analytics should make it possible to follow an opportunity through each stage:

The opportunity was identified.
A recommendation was made.
The employer or responsible party approved an action.
The action was completed.
The financial or clinical result was measured.

LucyIQ™, LucyRx’s actionable pharmacy intelligence capability, is designed to help follow an opportunity from identification through action and measurement.

That starts with calling each number what it is. It continues by showing whether the projected opportunity led to a completed action and a measurable result.

Six questions to ask

An employer should be able to look at any savings figure and answer:

What kind of number is this?
What action produced it?
What assumptions were used?
Who received the value?
Has the result already occurred?
Can we verify it?

Clear labels do more than improve a report.

Each number has a purpose.

Employers should not have to guess which one they are seeing.

Projected Savings vs. Realized Savings: What Employers Should Ask

4 Min read

Evan Spitulnik

Projected opportunity

Avoided cost

Contractual guarantee

Annualized estimate

Realized savings

Plan and member savings are different

Clinical measures need clear labels, too

Follow the number from opportunity to result

Six questions to ask

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