Spread vs. Pass-Through Pricing Models

Spread Pricing: The PBM bills the MCO one amount for a patient’s medication, and pays the pharmacy a smaller amount to dispense it. The PBM keeps the difference as profit — along with any rebate it receives from the drugmaker. That means PBMs have an incentive to bill the MCO (i.e., the taxpayers) as MUCH as possible while paying the pharmacy as LITTLE as possible. Until recently, the amount of a PBM’s spread, and how much it received in rebates, has been a closely guarded secret.

Pass-Through Pricing: The PBM receives a flat fee for each prescription it processes, on top of the actual cost of the medication. Pharmacists are (in theory) also paid a set amount per prescription, again, above the cost of the of the medication.