‘Spread’ is the main difference between a traditional PBM and a pass-through one. It's a way to earn revenue for some PBMs and contractually they may not fully disclose it to you.
Only a truly transparent PBM will disclose all of its revenue sources.
WHAT DOES TRUE TRANSPARENCY LOOK LIKE?
Full transparency can be defined as having complete visibility into drug prices and all benefit plan costs. Without such access, you may experience hidden expenses that could cost you more than you were expecting. You’ll want to understand and evaluate all PBM contract areas, so you can secure a benefit plan that aligns with your goals. Ultimately, transparency (or the lack thereof) can impact your pharmacy benefit costs.
One example, some PBMs keep a portion of rebates, while in a pass-through business model 100% of all financials are passed back to plan sponsors. This includes all pharma revenues received by the PBM.
The question is, how much of each of these are you receiving back to help lower costs? Do you have visibility to know if you are even getting them in the first place? In a traditional model, there is less transparency regarding the portion of rebates it is retaining, so you may be ‘leaving money on the table.’
Examples of pharma revenue that you may or may not have access to are:
- Rebates: A standard form of payment to payers.
- Rebate Administrative Fees: A payment for covering operational costs to administer the contract.
- Market Share Fees: A type of rebate that pays for the volume of claims for a specific drug(s).
- Health Management Fee: Compensation for creating adherence and/or compliance programs.
- Data Sales Fee: Revenue from the sale of detailed claims data to manufacturers.
- Educational Fee: Compensation for supporting and operationalizing educational programs.
- Purchase Discount: Invoice pay reductions or purchase level rebates (incentives) received for buying specific drugs.
A pass-through model PBM will pass all of these savings back to you, the plan sponsor.
IS YOUR PBM ALIGNED TO MEET YOUR NEEDS?
Transparency goes beyond drug pricing and rebates. A PBM’s business model and philosophy on transparency can impact how it operates. This influences the decisions it makes on your behalf to administer your Rx benefit plan.
Operationally, here are key areas that can impact your total costs. To bring this concept to life, let’s compare one PBM to another in the following chart. How do they score in column A versus column B? Then, ask yourself, how important are each of these to you and your organization.
There is more to PBM transparency than you think, with more strategies than we can cover in a blog post. Each PBM has its own operational and contractual definitions, that’s why we created an e-book with a PBM scoring checklist.
Learn key differences between how PBMs define transparency and how it impacts your total costs.
- Get real-world examples of the differences in each PBM business model.
- Apply what you’ve learned by using our PBM transparency checklist.
- Score your PBM to see how it rates, or compare PBMs in your proposal.
Why our e-book? Learn how the Navitus pass-through PBM model and fully operational and contractual transparency align to deliver results that you can see. Plan sponsors can save 10-15% on their pharmacy benefit costs by choosing Navitus as their pass-through, transparent PBM partner solution.