Transparent or Traditional

Traditional pricing, transparent pricing, guaranteed rate pricing and pass-through pricing all refer to the different pricing structures used by PBMs to underwrite their price for your drug costs.

Under a pass-through PBM arrangement, the plan sponsor pays exactly what the PBM paid to the retail pharmacy network - the actual contracted discounts and dispensing fees – nothing more, nothing less. Because the PBM does not make margin on these claims, they charge a straightforward administration fee. We would expect this to be the most beneficial to the client. PBMs still can make margin on Mail Order, Specialty and manufacturer fees.

What is lost in the assessment is an evaluation of the PBM’s cost base and rate guarantees. Overall lowest net cost is the bottom line value to the client. PBMs have varying degrees of buying power with wholesalers (impacting Mail Order and Specialty), volume leverage with the retail networks (deeper discounts) and leverage with manufacturers (rebates and admin fees). There are instances where a traditional arrangement with margin may be more advantageous.

Clients and their consultants need to identify the arrangement that will generate optimal savings, instead of solely evaluating how the PBM is going to receive payment for delivering services. The truth of these structures is in the minute details of each program. Our team brings PBM pricing variations into clear focus, enabling our clients to achieve desired financial goals.