Undocumented source of pharmacy benefit manager revenue

Purpose. The difference between what pharmacy benefit management companies (PBMs) charge prescription benefit plan sponsors and what dispensing pharmacies are paid ("spread") was studied. Methods. Data from prescription transaction invoices from two large employer groups, each using a different PBM, and 84 community pharmacies (which differed for each employer group due to clear geographic separation) participating in these plans between October 1, 2002, and December 31, 2004, were studied. Detailed community pharmacy payment transaction records were compared with PBM claim records from two employers. One employer provided 49,633 prescription claim records, and the other employer provided 120,684 prescription claim records. Spread between amount due billed to the employer by the PBM and amount due paid to the dispensing pharmacy by the PBM for all prescriptions, for brand-name prescriptions, and for generic prescriptions was analyzed. Results. For the two PBMs combined, the mean ± S.D. spread for 20,376 paid transactions was $1.82 ± $8.26 per prescription. The mean ± S.D. spread for brand-name prescriptions was $0.07 ± $5.18 and for generic medications was $4.20 ± $10.69 per prescription. The two PBMs differed significantly in their spread for all drugs ($2.30 ± $6.17 and $1.78 ± $8.40) and for brand-name drugs ($0.47 ± $3.21 and $0.04 ± $5.30). The difference between PBMs for spreads on generic medications did not achieve statistical significance. Conclusion. Wide variations in spread pricing existed between two PBMs and between brand-name and generic medications. Pharmacists and prescription benefit plan sponsors should be aware of this discrepancy and seek a more transparent contract with PBMs.