Experiment Induces Confused Supposition

Do retail pharmacies make more or less money through PBM contracts?  If they make less money is it to a point they lose money?  Or do they profit? Before asking your pharmacist, try this experiment first.

By Bill Rusteberg

Provide your pharmacist with a detailed 90 day Rx claim run and have him reprice each claim to his cost. Then add a margin (ask the pharmacist how much he needs) and then compare total cost to actual paid claims through the PBM.

I performed this experiment with a Mom & Pop retail pharmacy recently. They repriced our 90 day claim run to their cost. Then we mutually agreed to a margin to be added per script (called profit). When we added up his cost plus profit the savings to the payer (plan sponsor) were significant.

When asked if he would entertain a direct agreement with the payer on a cost plus basis, he readily agreed. The savings proved enough to eliminate all patient co-pays (those nasty impediments to health care access called “skin-in-the-game“) while providing a savings to the plan sponsor as well. A win win.

But when there is a winner there is a loser. So who lost?

Why would a pharmacist be willingly take less (especially if they say they lose money under PBM contracts)? If we hypothesize they earn more through PBM contracts why would a pharmacist agree to our cost-plus-a-margin proposal that seemingly produces less revenue for them as was the case here? Confused? You’re not alone.

Could it be they actually make more, not less? If they make more, and the plan sponsor and plan member pay less, then the difference must be under cup number three. Is it?

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