Saving Money By Charging More

“Good news!” says the PBM representative, “Your generic spend equals 90% of total drugs dispensed, Good Job!”

“Wow!” says the CFO, “That’s awesome……. members are getting the cheaper generic drugs! We must be saving a ton of money!”

“Yes indeed, we’re saving you money by charging more!” purrs the rep.

Little does the CFO know that the plan is paying 48 cents for a 2 cent generic pill and the PBM is laughing all the way to the bank……………….

PBM Spread Pricing Explained:

AWP = Average Wholesale Price AWP – ‘Discount’ = What Plan Pays PBM for the Prescription

MAC = Maximum Allowable Cost = What the PBM Pays the Pharmacy

What the Plan Pays PBM for Drug – MAC = ‘Spread Price’ Fee That PBM Keeps

NADAC = National Average Drug Acquisition Cost = What the Pharmacy Pays to Buy the Drug MAC – NADAC = Fee that Pharmacy Keeps Example: Amlodipine (common generic blood pressure medication) AWP = $2.38 AWP – 80% = $0.48 MAC = Proprietary (Unknown) NADAC = $0.019

So the Plan Pays 48 Cents a Pill for a Drug that Costs 2 Cents a Pill!!

Sources: https://www.healthaffairs.org/do/10.1… https://www.46brooklyn.com/research/2… AHealthcareZ is 200+ Healthcare Finance Educational Videos.

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