What does the term 'spread pricing' imply in the context of pharmacy benefit management?

The term 'spread pricing' in the context of pharmacy benefit management refers to the practice of charging different prices to various clients, which allows pharmacy benefit managers (PBMs) to establish a profit margin based on the difference between what they reimburse pharmacies and what they charge insurers or clients. This model creates a 'spread' between these two amounts, hence the name.

Spread pricing can lead to differing reimbursement rates for pharmacies based on the contracts negotiated by the PBM, affecting how much clients end up paying for medications. This practice allows PBMs to manage costs and balance influences in the market, which can vary widely among different clients or plans.

Understanding this concept is crucial as it shows how PBMs operate within the pharmaceutical benefits landscape, affecting both pharmacies and payers. The other descriptions do not accurately capture the essence of spread pricing as it does not specifically relate to only mail-order pharmacies, nor does it guarantee lower-than-market prices or indicate an open pricing strategy.