What is a key characteristic of Level 2 transparency with PBMs?

A key characteristic of Level 2 transparency with Pharmacy Benefit Managers (PBMs) is the passing through of all rebates and prices to the sponsor. This level of transparency indicates that the PBM provides the sponsor (usually an employer or health plan) with clear visibility into how drug pricing and rebates are negotiated and applied.

In Level 2 transparency, the focus is on ensuring that sponsors benefit from the financial arrangements made by the PBM. This means that when PBMs receive rebates from drug manufacturers, they must disclose these rebates and directly pass them on to the sponsors. This promotes trust and accountability in the relationship between PBMs and their clients, as the sponsors can see how much they are actually saving on prescription drug costs.

In contrast, other concepts like full disclosure of cash flows or detailed audit reports, while important, do not fully capture the essence of Level 2 transparency as it specifically relates to the handling and sharing of rebates and pricing with the sponsor. Offering minimum manufacturer revenue would not align with the principles of transparency, as it doesn't directly involve the financial interaction between PBMs and sponsors.