Pass-Through PBM Programs


Did you know?

If you are a plan sponsor utilizing a pass-through PBM program, independent community pharmacies are (in aggregate) typically your lowest-cost option?


A few market dynamics that have created this counter-intuitive situation:

-One Voice: Chain pharmacies have thousands of locations, but negotiate PBM contracts as a group. Independent pharmacies use multiple contracting options (PSAO’s, directly etc.) that fragment and virtually eliminate negotiating leverage.

-Vertical Integration: PBMs that also own pharmacies have traditionally paid themselves better.

-Smaller Niche PBMs: In order for smaller PBMs to compete, they typically have to pay a premium rate to include the major chains and have “65,000+ pharmacies” in their network.

What can I do?

-Ask your PBM, TPA, or Broker to analyze your PBM data to validate this is the case (sometimes as easy as just asking your PBM…”are independent pharmacies lowest cost?”

-Narrow/exclusive networks are becoming more common. If you have good coverage with independent pharmacies ( to locate)consider eliminating at least one chain, or incentivizing the lowest cost option through copay design.