*Image created based upon real text messages between PBM and Consultant*
By Chris Deacon
At a recent event, I mentioned something in passing: “You know, the price vendors have to pay just to get on the spreadsheet.”
Afterward, someone pulled me aside — clearly sharp, but a little embarrassed — and asked, “Can I ask… what exactly do you mean by that?”
I apologized for the jargon and explained:
I was talking about the process some consultants use to decide which PBMs or vendors will even be allowed to bid on your business.
Before pricing. Before proposals.
There’s often a pay-to-play wall — and vendors are told what it costs up front so that they can price this cost into their bid for you, their potential client.
Here’s what that “price to get on the spreadsheet” looks like in practice:
$60,000 for the RFP
$20,000 for implementation
$40,000 to audit that implementation
$50,000/year for ongoing auditing
$60,000/year for “consulting”
$30,000 for a market check
*note that these are actual figures from an actual communication between a large [but not name] consulting firm and a potential PBM bidder.
All of these fees are paid by the PBM. Are they disclosed to the client?
I walked the audience member through it:
When a consultant presents you with a curated list of vendors, you may assume it’s objective. But often, that list was shaped by who was willing to pay upfront just to be considered.
And because those costs are known to the PBMs ahead of time, they get priced into your contract. You just never see the line item.
“But, wouldn’t we see this because of the requirements under the CAA… disclosing direct and indirect comp.” (I told you she was sharp).
“How do consultants justify not disclosing this?”
Here are two of the cleverest arguments I’ve heard:
▪️ “These fees aren’t tied to your specific plan.”
They’ll argue that the fees were paid to support a national platform or broader client base — not just your plan — so disclosure isn’t required.
▪️ “These are fees for services we provide to the PBM — not to the plan.”
They frame audit support, implementation oversight, and benchmarking as services to the vendor, not the client — and say that since the plan isn’t paying, it’s not compensation “in connection with” your plan.
Clever, but not correct. If the same firm that’s supposed to advocate for your plan is charging tolls to the vendors it’s evaluating — and not telling you — that’s not platform support. That’s a conflict of interest with a price tag.
If those vendor-paid fees shape your plan’s choices, pricing, and performance – in any way whatsoever – then you should know about it, that was the whole point of 408(b)(2).
More common than you think. Here’s actual language in a public RFP document put out by a large national brokerage acting as Consultant:
RFP Fee
- (REDACTED) will invoice the winning PBM $25,000 after the execution of the contract.
- PBM will pay the fee to (REDACTED) no later than (thirty (30) days after the execution of the contract.
- PBM will not invoice City of New Braunfels for these fees.
On-Going Commissions - PBM will pay (REDACTED) a consulting fee of $4.00 PMPM no later than thirty (30) days after each completed contract month to start after the effective date.
- Late payments shall bear a late fee of one and one-half percent (1½%) for each thirty (30) days that payment is late.
- Commissions will be paid through the contract term and will not terminate if City of New Braunfels decides not to use our services.
- PBM will not invoice City of New Braunfels for these fees.
Want to see more like this? This is only one example – many more
Turbocharging consulting fees by incorporating a vendor paid “Cover Charge” as a condition to participate in a RFP process as some of the big brokerage firms posing as consultants are known to do is more common than you think. This is just the tip of the iceberg.
