What does pass-through pricing generally indicate about PBM cost handling?

Pass-through pricing is a model used by Pharmacy Benefit Managers (PBMs) that indicates a specific approach to handling costs and pricing transparency. This pricing structure means that the PBM does not keep a margin or profit from the drug price that they negotiate with pharmacies. Instead, the negotiated price is passed directly to the payer without markups, providing a clearer view of drug costs.

By utilizing pass-through pricing, there is increased transparency in drug pricing for payers, as they see the exact costs associated with drug purchases without additional fees or hidden charges. This contrasts with other pricing models, such as spread pricing, where the PBM charges the payer more than what they reimburse the pharmacy, pocketing the difference.

Thus, pass-through pricing suggests that the PBM operates in a manner that prioritizes straightforward cost management and transparency in drug pricing, allowing clients to understand precisely what they are paying for each prescription. This can lead to better budget management and cost-effectiveness for employers and insurers.