What does the formula for Earnings After Cash Disbursements (EACD) determine for PBM services?

The formula for Earnings After Cash Disbursements (EACD) is specifically designed to evaluate the actual net income generated after all relevant expenses have been deducted. In the context of Pharmacy Benefit Management (PBM) services, EACD reflects the true payment or profit from the services provided, ensuring that the financial standing of the PBM entity is accurately assessed.

By calculating EACD, PBMs can determine how much revenue remains from the payments received after considering the costs associated with delivering those services, including any rebates, administrative fees, or other disbursements. This measure allows PBMs to effectively analyze their financial performance, making it crucial for evaluating the viability of their operations and decision-making processes regarding pricing and service offerings.

In contrast, the other options represent different aspects of pharmacy services but do not directly pertain to the EACD formula. For instance, while profitability of brand drugs or comparative costs between generics and brands may be relevant topics in PBM discussions, they do not capture the specific net earnings derived from service disbursements in the same comprehensive manner as EACD does.