Spread pricing is where a Pharmacy Benefit Manager (PBM) charges the plan sponsor more than they pay the pharmacy for a medication and keeps the “spread” as profit.
Plan sponsors typically do not know this practice is occurring.
Insider Tip: Spread pricing can increase Rx costs by 15% – 30%.
How Does Spread Pricing Work?
PBMs have negotiated prices on each medication a pharmacy dispenses. The PBM pays the pharmacy based on these contracted rates.
When a PBM uses this pricing tactic, they charge the plan sponsor more than what they pay the pharmacy. The trick is this “spread”, or difference in cost, is not disclosed and PBMs can decide how much to mark it up.
The result is that plan sponsors often pay exorbitant fees without knowing.
What is a Better Option?
Utilizing a no-spread, administration fee-only model is a better option for plan sponsors.
In this model, PBMs charge plan sponsors exactly what they paid the pharmacy + a disclosed per prescription administration fee.
This is why Sona Benefits’ pricing is better than much larger competitors. Clients are the beneficiaries of the pricing because there are no hidden costs.
By moving to a no-spread, administration fee-only model, most plan sponsors can save 15% – 30% on their total Rx spend.
Real-Life Example:
- Pregabalin – cost with national PBM using spread pricing: $168.29
- Pregabalin – cost with Sona using no-spread: $30.35 (admin fee included)
- Difference: $137.94
- Atorvastatin – cost with national PBM using spread pricing: $50.68
- Atorvastatin – cost with Sona using no-spread: $15.07 (admin fee included)
- Difference: $35.61
Questions to Ask?
- Do you know if your PBM uses spread pricing?
- If you are not sure, the answer is most likely yes.
- Does your PBM charge “$0 admin fees?”
- If so, they are making money elsewhere and are most likely utilizing spread pricing.
Resources to Learn More:
Eric Bricker shares tons of information to help employers understand pharmacy costs and benefits better.