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  • Writer's pictureRichard Vaughn

Top 3 Questions to Ask any "Transparent" PBM

Updated: Aug 29, 2023

“Transparent” PBMs are all the rage today as a solution to the opaque and predatory pricing that health insurance brokers and self-insured plan sponsors get from the traditional “Big 3” PBMs. But what is a “transparent” pharmacy benefit manager exactly? How are they making money? When they claim they can save you 30%, 40%, or more, how are they actually planning to get those savings, and what assumptions are they making to get to those numbers?

Before you talk to another “transparent” PBM, here are the top three questions to keep in mind for them:

1) How do you make your money?

“Transparent” PBMs say that they have no hidden costs and take no spread pricing. This is all a drastic improvement over the traditional PBM model, but what are these costs that they’re being transparent about? If there are admin fees, are they charged per prescription? If so, even this “transparent” PBM has the incentive to see your plan pay more through increased prescription volume. Are there per member per month fees? If so, what do they cover? A flat fee may sound good until you realize that you need to pay for a bunch of add-ons in order to get the benefit you actually want. Compare this model to a discount airline. They may advertise a flight for $39, but once you pay to pick your seat, carry on a bag, and have a glass of water on board, how much are you really paying?

2) Is everything about your model legal?

This may seem obvious. After all, what PBM would knowingly offer an illegal service? But many “transparent” PBMs touting huge savings get to these numbers by assuming that a large part of specialty volume can be imported from overseas pharmacies. Under federal law, this practice is still very much illegal. Many states have decriminalized medical marijuana, but your plan doesn’t offer this as a covered prescription drug. Why? Because it’s still federally illegal. International drug importation schemes are illegal and put the PBM, the plan sponsor, and the member at risk.

3) How do you achieve your savings?

Besides claiming to be transparent about their costs, many PBMs also claim they can save plan sponsors 30%, 40%, or even more. What programs would have to be in place, and what assumptions do they make to get to these numbers? Are they relying on illegal international imports? Do they boast about “aggressive formulary management?” In reality, this “formulary management” means “don’t cover many expensive drugs at all, and make it so hard for patients to get the ones that are covered that they just give up.” If you can only achieve these savings by asking your members to break federal law and go without the drugs that their doctors prescribe, are you really offering any “benefit” anymore?

While a “Transparent” PBM may sound good at the surface, peeling back the curtain to see how the sausage is really made can reveal some disturbing risks that any broker, consultant, or plan sponsor should carefully review before moving forward. The next time you’re considering a PBM change, remember this: Rescription is the only PBM out there that is completely open about their program. Their only revenue is an all-in per member per month subscription fee. They achieve 20% - 40% net savings for plan sponsors through a combination of hospital system partnerships to access high-cost drugs at the lowest price available and publicly published NADAC lesser-of pricing for everything else. Their pricing model means that patients get more choice in their health care coverage, not less. And everything they do is legal, which shouldn’t need saying, but it does. Visit to learn more.



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