Muddled Molly

“If someone could explain the convoluted world of PBM’s in a manner my pea size brain can fathom,  I would be most grateful.”

To:                              Staff

From:                         Molly Mulebriar

Re:                             Pharmacy Benefit Managers

Thought this would be of interest: I have three conflicting data points on a case I am looking at right now.

A BUCA credits their claim administration fee by about $72,000 in supposed Rx rebates but refuses to document.

A second PBM, working in conjunction with a TPA,  has offered to credit the TPA administration fees with about $30,000 in mysterious Rx rebates.

A third PBM tells me, based on current plan design and generic utilzation, the Rx rebates should be about $100,000 which are not credited but paid directly to the plan sponsor as earned.

If someone could explain the convoluted world of PBM’s in a manner my pea size brain can fathom,  I would be most grateful.

I want this researched and a full, concise, understandable report on my desk by 10:00 am tomorrow morning.

Comments can be addressed to


From a TPA:

I have sent this to our former PBM Executive that we have on retainer for just such questions and analysis.

But what I can tell you is that PBM rebates can be adjusted by any PBM out there, including the Blues.  We often see their “PBM Rebate” as a PEPM that lowers their admin cost on quotes.  The more sophisticated brokers take this out but the less leave it in as they do not understand, so it works for BC/BS, emphasis on the BS part.  I can give you/the group whatever rebate you want and we can convert it to a PEPM and our admin can be completely FREE!

Rebates are a function of the net price the group is paying for their drugs.  That formula is complicated but at the end of the day, the “rebate” is just a function of how much over the bottom price the drugs are dispensed at, price wise.  And, as we all know, most groups and brokers don’t ask for PBM pricing comparison for the groups cost and it’s hard to get, but we have done some of that.

From a TPA:

I gotta be honest, I don’t fully understand the inner workings of the PBM world either, but the PBM takes on the risk of estimating the utilization for what they think they would get back in rebates.  Another way to do it is to give the customer 100% back, but we would just have to increase our admin cost by $3.00.  That way we are not guessing and they know they are getting everything back.

We could also adjust after the first year… see how the utilization is and credit them more for the second year.  Because we try to run lean on our admin cost we have to conservative with those credits because if we underestimate… we don’t pass go and don’t get $200