Pharmacy Benefit Managers (PBMs) and Pricing Games They Can Play
In this post we outline a few of the pricing games Pharmacy Benefit Mangers (PBMs) can play.
Disclaimer... not all PBMs play these pricing games, but many do. There are several reputable ones who pass along 100% of manufacture rebates and offer fixed, transparent pricing.
1) Spread Game
PBM marks up a drug's price and lists that as the price paid to the drug provider. The health plan pays the marked up price, when the actual price the PBM paid was significantly less.
2) Repackaging and Repricing Game
PBM pushes the health plan towards their mail-order-program by using deeper discounts, eliminating admin fees, and/ or eliminating member copayments.
By repackaging the PBM can now legally reprice the drug (higher) without notifying the health plan.
3) Rebating Game
PBM preferred drug formulary does not pay for a generic drug (less expensive), but will pay for the name brand drug (more expensive).
By steering members to a preferred drugs, PBM receives a significant rebate from the name brand drug manufacture, but passes along only a small percentage or 0% to the health plan.
4) Mail Order Waste Game
Mail-order-program financially incentivizes the PBM to continue shipping unwanted or needed medications.
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