A PBM Based on Full Disclosure and Pass-Through

Problem. Conventional Pharmacy Benefit Management firms (PBMs) typically have dozens of hidden fees embedded in their contracts, making it all but impossible for purchasers to determine the net price per drug. In the last several years, a crop of new “fully transparent” and “pass-through” PBMs have emerged, most of which claim to report all sources of revenue and to return all rebates to the employer client. Most also include a range of medication management programs aimed at ensuring the prescription of the most appropriate drug for each patient, procured and administered at the most appropriate setting and price.


Few PBMs, however, have been willing to memorialize those claims into contractual guarantees or submit their processes to independent third-party review. While there appears to be little question that the new wave of PBMs offer significantly greater value than the 3 dominant players – i.e., Express Scripts, CVS and Optum Rx – the complexity of PBM arrangements has rendered it difficult for purchases to distinguish the value differences among the newer entrants.

Solution. In its contracts, this PBM claims full disclosure, that its administration fee is its only source of revenue, that they do not engage in spread pricing (i.e., it does not mark up its drug prices), and that they pass all rebates back to their clients. These provisions are detailed in their client contracts, a characteristic that was validated by the Validation Institute.

Results. This organization claims a 43% reduction in client drug spending over a 12-month period through a program that applies drug manufacturer copay discounts and patient assistance programs to lower the plan’s expenses. It also uses international sources for certain drugs to deliver a lower cost.

The Validation Institute performed a review of these claims. For each of the three programs – copay discounts, patient assistance programs, and international sources – the analysis compared what the plan would have paid under the PBM contracts (net of rebates) to what the plan ultimately paid. Note: Co-pay program’s savings reduced the plan’s costs; member copays may have been reduced or eliminated, but those savings are not shown here.

 Without This PBMWith This PBMSavings
Copay Cards$1,018,981$719,815$299,166
Intl Sourcing$134,047$95,027$39,020
Pt Assistance Programs$509,606$138,444$371,162
Total Savings  $709,348
Total Drug Cost$1,662,634 $953,286
% Savings  42.7%

This PBM has also retained The Validation Institute to perform an independent review of its financial records to affirm that the administrative fee is its only source of revenue.

Market Differentiators.

  • Contractual guarantees of fee structure, spread pricing ban, full rebate pass-through to purchasers, and PBM status as a health plan fiduciary.
  • Strong, independently validated savings performance.
  • Voluntary commission of independent revenue source review.

Target Markets. Organizations that carry risk for medication procurement and management:

  • Middle Market Self-Funded Health Plan Sponsors (Employers and Unions)
  • Third Party Administrators (TPAs)
  • Captive Insurers
  • Stop-Loss Carriers

Do you think your organization is truly high-performing?

Schedule a free evaluation call to find out and learn how Proven Health can help you leave your competitors behind. 

Our Process:
1. We will contact you within two business days to send you a mutual non-disclosure agreement (NDA) for signature.

2. Once the NDA is signed, we will request your marketing materials, with an eye toward understanding:
• The problem(s) you solve in the healthcare market.
• Your solution.
• How your approach is different.
• Your target markets.

3. When we receive this information, we will schedule a one-hour free consultation to learn about your effort in more depth, and to talk through how Proven Health can help you achieve your goals.