Your pharmacy benefit manager is charging you $800 for a drug. They're paying the pharmacy $200 for it. They're keeping the $600 difference. It's called spread pricing. It's legal. It's in your contract. And most employers have no idea it's happening.
How It Works
PBMs sit between your health plan and the pharmacy. They negotiate what they pay pharmacies for drugs. They separately negotiate what they charge you. The spread between those two numbers is profit — and in traditional PBM contracts, there's no requirement to disclose it, pass it through, or explain it.
You can't audit it. You can't see it in your reporting. You're just paying it.
Why It's Still Legal
The FTC has called this out. Several states have moved to ban spread pricing for Medicaid plans. The commercial employer market hasn't caught up yet — which means if you're self-funded and on a traditional PBM contract, you're almost certainly subsidizing this model right now.
"You can't audit it. You can't see it in your reporting. You're just paying it."
The Fix Is Structural, Not Negotiated
You don't fix spread pricing by asking nicely for a better deal. You fix it by changing the contract type entirely. You need a pass-through PBM contract — one where:
- The PBM charges a flat, disclosed administrative fee.
- 100% of drug costs and rebates pass directly to you.
- What the pharmacy gets paid is what you get charged. No spread.
- You have full audit rights on ingredient costs.
No black box. No mystery markup. No surprise spread on your top-50 spend drugs.
Does your PBM contract include audit rights on ingredient costs and spread?
If the answer is anything other than a clean "yes" — you're on the hook for a number you can't see.
— Tess
