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Employers & Unions

How pharmacy benefit managers impact your employees' and members' health, their wallets - and your business's bottom line
How PBMs Exploit Employers

PBMs are Bad for Business

The traditional PBM business model masquerades as a cost saver. In reality it's a cost multiplier. That's because they manipulate the system to profit at almost every section of the supply chain - at the expense of the plan payers and patients they purport to represent. From overbilling employers & unions while denying care to their covered members, to pocketing manufacturer rebates under the guise of "fees", PBMs are bad for business.

Read the Reports

The truth about PBM spread pricing

Spread Pricing 

PBMs will tell you that spread pricing helps save your plan money. Nothing could be further from the truth.

Spread pricing is the PBM practice of charging the plan payer several times more than the actual cost of a medication while reimbursing the member's pharmacy below (sometimes far below) the actual cost of that medication. The PBM then pockets the difference which can range from a few cents to thousands of dollars per prescription. 

Health plan payers think they are paying a discounted price for prescription medications.  Meanwhile the local pharmacy hasn’t been fully reimbursed to cover the drug's acquisition cost. The result is a fomenting crisis for small business pharmacies - many are pushed into laying off staff, decreasing service hours, and even permanently closing. 

Vertical Integration: Bigger is Not Better

Connect the Dots on Vertical Integration

The American healthcare system has been allowed to morph into a highly vertically integrated industry comprised of predatory corporations. Thanks to a series of high profile mergers, 3 major PBMs (CVS Caremark, Express Scripts, OptumRx) now control well over 80% of the entire US healthcare market, with a 4th PBM - Prime Therapeutics - bringing the estimated total market share to 90% between 4 corporations. Between 80% and 90% of all prescriptions processed in the U.S. are processed through 3 or 4 PBMs - though there are at least 10 times as many PBMs operating in this country.

How does this hurt businesses?

Vertical integration means PBMs can force manufacturers to pay rebates (or what they are now calling "manufacturer processing fees") or a medication will not be on a plan's formulary. Rebates are like commissions - they are paid out according to demand and dispensing of the drug. The better the rebate, the more likely the PBM will include a drug in a plan's formulary. No rebate often means the drug will be excluded from the formulary. These backroom deals mean patients are often forced to take medications that are not what their doctors prescribed or not in their best medical interest. Sometimes it means they have to switch medications they’ve been on for years or that have worked for them because of PBM rebate manipulation.  Sometimes it means waiting for access to medication while their health declines. All of which means the employer/plan payer is subjected to increased medical expenditures that could easily have been avoided.


PBMs jealously guard contract information, citing such tropes as “trade secret” or “proprietary” when asked to share basic details about a contract. Patient copays, drugs included on the formulary and how they're included, how much the pharmacy is reimbursed, and other topics normally disclosed between contracted parties are purposefully kept from plan payers by PBMs. Neither the patient or the plan payer is allowed to to know where their money is going or if the PBM has retained any portion of the rebates the plan is rightfully entitled to  - even on government funded plans where taxpayer dollars are at risk. Additionally, PBMs give themselves the authority to override doctors’ “dispense as written” orders and can require step therapy protocols before patients can receive proper treatment - a practice that ultimately causes plan payers far higher medical expenditures in the form of ER visits and hospital stays due to lack of appropriate, timely care.

Why Does Our Broker Say Traditional PBMs Are Best?

Your broker's first priority is not the well being of your business.

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