The purpose of a Prescription Benefit Manager (PBM) is to provide lower pharmacy costs for employers and their membership by using the PBM’s expertise to negotiate pharmacy network discounts and drug manufacturer rebates. However, most traditional self-funding PBM goals are not aligned with their clients’ goals of lowering claim costs. Most of these companies are publicly traded and are expected to show profit year after year. One way they accomplish this is by increasing claim costs through the use of a spread pricing model.

What is spread pricing?

In a spread pricing model, the PBM charges the employer more than what they paid the pharmacy for a certain medication and keeps the difference. Unlike a pass-through model, where the PBM charges the employer the same amount they paid the pharmacy.

The above example is just for one medication. Now consider how many more medications for which the employer could be overcharged. Keep in mind, spread pricing is typically applied to generic medications. However, it still inflates prescription drug costs and increases the employers’ overall costs.

Unlike traditional self-funded PBMs, Benecard actively manages employer claim costs, does not participate in a spread pricing model (which often results in increased costs to the employer), is a privately held company, and most importantly is able to guarantee our costs. Click here to see how we saved an employer $1,704,796 by switching from a self-funded arrangement to Benecard’s fixed-rate insured program.

Our goal is to continue to find the most effective ways of controlling drug costs for our clients and their membership. Ask yourself if the PBM you work with shares the same goals as you. It can have an impact on your prescription drug costs today and tomorrow.

The spread pricing flow chart is loosely based on the flow chart found in the article “Spread Pricing: Largely Unknown Much Scrutinized and Criticized,” published in Managed Care Magazine. https://www.managedcaremag.com/archives/2019/9/spread-pricing-
largely-unknown-much-scrutinized-and-criticized. (last accessed 2.17.20)