What is a common way for Pharmacy Benefit Managers (PBMs) to generate additional revenue from transactions?

Pharmacy Benefit Managers (PBMs) often utilize spread pricing as a common method for generating additional revenue from transactions. Spread pricing occurs when a PBM charges a health plan or employer group a higher price for a medication than what it pays to the pharmacy for that same medication. The difference, or "spread," between the amount charged to the client and the amount paid to the pharmacy represents profit for the PBM.

This practice allows PBMs to maximize their profit margins while negotiating rebates and discounts from manufacturers and pharmacies. By maintaining the spread, PBMs can influence the cost structures in a way that can be advantageous for their financial outcomes, although it can lead to transparency issues and concerns from clients about the true costs of medications.

Other pricing strategies, such as pass-through pricing and transparent pricing, generally aim for greater transparency and align the PBM’s interests more closely with the interests of the health plans and their members, thereby minimizing potential revenue generated through spread. Fiduciary pricing isn't a standard term commonly associated with PBM practices in this context, which further underscores why spread pricing is the most recognized avenue for revenue generation within this framework.