6 ways big PBMs hide fees
Is a PBM claiming to have “low fees”? If so, watch out…
Big PBMs have become the masters of generating massive profits using hidden fees. This is how Caremark, the PBM owned by CVS, generated more profit for CVS in 2022 than all 9,000+ of its CVS retail stores combined! Let’s pull back the curtain on some of these hidden fees:
- Spread pricing - PBMs charge their clients more for a claim than the pharmacy charges them, and the PBM keeps the difference.
- Rebate capture - Big PBMs make deals with pharma companies to get kickbacks (“rebates”) for certain drugs. Big PBMs keep some or all of these rebates, sometimes offshore.
- “Other” manufacturer revenue - Big PBMs have created revenue streams from pharma beyond rebates. For example, they have created a revenue stream called a “Manufacturer Access Fee” which PBMs often keep.
- Fine print fees - Often a PBM will claim a low “admin fee” while charging for many other items which can add significant costs.
- Owned pharmacies - Big PBMs own specialty and mail order pharmacies, creating conflicts of interest. They may overpay their own pharmacies to generate pharmacy profits.
- Expensive drugs - Big PBMs will drive members to higher cost drugs so that they can make more money on spread and rebates. Meanwhile, the client pays more..
At SmithRx, we only keep our fully-disclosed Core and Connect 360 fees
At SmithRx, we keep it simple. We charge a flat fee per-member-per-month, and pass on every other cent to our customers. This is why we save our clients money year after year.
A new type of pharmacy benefits manager, SmithRx is working to reduce pharmacy costs by reimagining the traditional PBM as a Drug Acquisition Platform built on transparent modern technology that aligns with the needs of our customers.