Can a retail pharmacy invoice a PBM for an ingredient cost greater than $20 if they charge a cash-paying customer $20 for a drug?

The rationale behind the assertion that a retail pharmacy cannot invoice a PBM for an ingredient cost greater than $20 when the charge to a cash-paying customer is $20 is rooted in the principles of cost transparency and integrity in billing practices.

When a pharmacy charges a customer a specific amount for a medication, especially one in a cash transaction, it sets a benchmark for the value of that medication in the market. If the pharmacy then tries to invoice the PBM for a higher ingredient cost, this could imply a lack of consistency or honesty in pricing. Billing a PBM for more than what a cash customer pays can breach the expected transparency in the relationship between pharmacies and PBMs, and can be perceived as an attempt to manipulate pricing for reimbursement purposes.

Thus, the standard practice is to align the ingredient cost invoiced to the PBM with the cash pricing to maintain the integrity of the pricing model and establish trust with all parties involved. This adherence to a straightforward pricing strategy reinforces ethical billing practices and aligns with regulatory expectations in the pharmacy benefit management industry.