The Hidden Revenue Streams Controlling Your Pharmacy Cost

The hidden revenue streams controlling your pharmacy cost. Increasing healthcare costs and lack of transparency within pharmacy spend have many employers searching for answers when it comes to how much power pharmacy benefit managers have and what they can do about it.

Pharmacy benefit managers (PBMs) are companies that manage prescription drug programs on behalf of employers and insurance companies. Their main goal is to generate savings for consumers by increasing their leverage/buying power as they represent a large population.

THE POWER BEHIND PHARMACY SPEND

Over time pharmacy benefit managers have consolidated. Three companies now control most of the market and, due to a lack of transparency and insight, have created several revenue streams through various channels. In other words, PBMs, responsible for generating cost savings for consumers have been generating significant revenue for themselves.

Understanding how your pharmacy benefit manager makes money is important, but not always straightforward. Acting as the middleman between pharmaceutical companies and employers, PBMs have an opportunity to make significant profits. Two of these revenue streams are:

• Spread Pricing. Similar to spreading butter on bread, spread pricing works by adding an additional cost or percent on top of the amount the pharmacy benefit manager pays, keeping the difference. For example, if a pharmacy benefit manager secures a drug for $20 from a pharmacy they can charge the insurance company $50 for that same drug (the bread), keeping the $30 profit for themselves (the butter).
• Rebates. PBMs receive discounts from pharmaceutical companies as an incentive to put their drug in formularies that are then offered to insurance companies. The PBM will then keep a percentage, or the entire amount, as a profit. These rebates can total hundreds of thousands of dollars.

WHAT SHOULD YOU DO?

If you don’t know how much your company pays for pharmacy, you’re not alone. Many employers are in the same position and considering carving out pharmacy from their benefit programs. Whether the goal is to gain more insight and data to control spending or to negotiate better deals for their unique workforce, taking control of your pharmacy spend can allow for better management of pharmacy costs and performance.

WHAT ARE THE SECRET REVENUE STREAMS?

This April, at The NextGen Healthcare Summit, learn more about the role pharmacy benefit managers have in your benefits program. How their revenue streams work and how you can redesign your plan to gain insight, without sacrificing quality. Trevor Daer, founder of Granite Peak Analytics, will be leading the discussion and will talk about the secret revenue streams of pharmacy benefit managers and how to eliminate these from your plan.

Following the discussion, there will be an opportunity to ask questions about your plan and pharmacy benefit manager.

Don’t miss out on this unique opportunity — Sign up today

Part 2 of The NextGen Healthcare Summit will take place on April 19th, 2023, at noon, EST. Or, if you’re interested in learning more don’t hesitate to reach out!