Companies that specialize in pharmacy benefit management, often known as PBM, function as intermediaries between insurance providers, pharmacies, and manufacturers to negotiate lower prices for pharmaceuticals on behalf of insurance providers.
Is CVS a PBM?
What is a PBM?
CVS Caremark provides assistance to a wide range of clients in the pharmacy benefit management (PBM) industry, including businesses, unions, health plans, and government payors, in an effort to curb the ever-increasing cost of pharmaceuticals. Our PBM clients have a variety of alternatives available to them to select from in order to compensate us for the services that we provide, and we collaborate with our clients to negotiate price options that best satisfy their needs as well as the needs of their members.
- In one version of the business model, customers commit to paying not just the price agreed with the pharmacies, which is subject to change based on the ebb and flow of prices in the market, but also a separate administrative charge for the services that our company provides.
- The majority of the time, our customers opt for a different model, which involves them entering into a contract for predictable drug costs throughout the year and allowing the PBM to keep the difference between this fixed amount and the amount paid to the pharmacy that dispenses the drugs.
We find that this model is the most popular among our customers. This second alternative, which is typically referred to by its popular name, “spread pricing,” is frequently misinterpreted. Spread pricing is simply a term that is used to describe the difference in pricing between what we are paid and what we reimburse our network pharmacies.
- This is similar to the way that any other company makes a profit on the difference between what it pays to acquire goods and what it charges the end user for those goods.
- Spread pricing is not unique to our company.
- Because it offers our customers with consistency and predictability regarding the prices of their medications, this approach is often requested by our customers, including a significant number of the managed Medicaid plans that we serve.
We earn a profit on certain pharmaceuticals using this technique, while we incur a loss using it for others.
Is CVS a PBM?
What is a PBM?
CVS Caremark provides assistance to a wide range of clients in the pharmacy benefit management (PBM) industry, including businesses, unions, health plans, and government payors, in an effort to curb the ever-increasing cost of pharmaceuticals. Our PBM clients have a variety of alternatives available to them to select from in order to compensate us for the services that we provide, and we collaborate with our clients to negotiate price options that best satisfy their needs as well as the needs of their members.
- The clients agree to pay the price that was negotiated with the pharmacies, which can change in accordance with the fluctuation of costs in the market, as well as a separate administrative fee for the services that we provide.
- This is one model.
- Another model has the clients agree to pay the price that was negotiated with the pharmacies.
The majority of the time, our customers opt for a different model, which involves them entering into a contract for predictable drug costs throughout the year and allowing the PBM to keep the difference between this fixed amount and the amount paid to the pharmacy that dispenses the drugs.
- We find that this model is the most popular among our customers.
- This second alternative, which is typically referred to by its popular name, “spread pricing,” is frequently misinterpreted.
- Spread pricing is simply a term that is used to describe the difference in pricing between what we are paid and what we reimburse our network pharmacies.
This is similar to the way that any other company makes a profit on the difference between what it pays to acquire goods and what it charges the end user for those goods. Spread pricing is not unique to our company. Because it offers our customers with consistency and predictability regarding the prices of their medications, this approach is often requested by our customers, including a significant number of the managed Medicaid plans that we serve.