Does Your PBM Contract Tell You Everything, or Just Enough?

Most plan sponsors assume their pharmacy benefit is fully disclosed because they receive reports. Rebate summaries. Pricing overviews. An audit clause somewhere in the fine print.

That's visibility. It's not Full Disclosure, and the difference is worth understanding.

Visibility tells you what you're allowed to see. Full Disclosure accounts for everything that exists. The gap between those two things is where most pharmacy benefit costs quietly accumulate.

How PBMs Actually Get Paid

A PBM can hand over a rebate report and still retain revenue under a different label. Here's where the money often goes without showing up in standard reporting:

• Spread pricing. The PBM charges the plan one amount and pays the pharmacy less. The difference is kept. It rarely appears in a pricing summary because it isn't required to.

  
  

• Reclassified fees. Administrative fees get restructured or renamed in ways that obscure their true purpose.

  
  

• Manufacturer payments outside rebate definitions. If a payment isn't contractually defined as a rebate, it doesn't have to be passed through, even if it's tied directly to drug utilization on your plan.

  
  

• Carve-outs. Certain drugs, channels, or programs get excluded from reporting, keeping portions of the financial picture out of view.

  
  

The Difference Full Disclosure Makes

Full Disclosure isn't a reporting format. It's a structural commitment, and it has to be written into the contract.

At DisclosedRx, we operate as The Fiduciary and The Fully Disclosed PBM®. That means we are contractually obligated to pass through 100% of rebates and 100% of drug pricing, with no spread and no carve-outs.

Our only revenue sources are a single administrative fee and a defined share of program savings, with clients retaining 75% of those savings.

No other revenue streams, from any source.

A fiduciary PBM is contractually and ethically bound to act in the best interests of its clients.

Every formulary decision, every channel recommendation, and every contract term exists to serve the plan and its members, not to generate additional margin for the PBM.

What to Look for in Your Contract

Most employers don't know what questions to ask, and PBM contracts are written in ways that make it easy to miss what's absent. Here's where to start.

How "Rebate" Is Defined

If the language excludes certain manufacturer payments, administrative fees, or supply chain credits, those dollars don't factor into pass-through calculations.

A narrow definition of "rebate" is one of the most common ways value leaves the plan without appearing in any report.

Ask: Does the definition capture every payment the PBM receives from drug manufacturers tied to utilization on your plan?

Whether Spread Pricing Is Permitted

Spread pricing doesn't always get named outright. Look for language that allows the PBM to reimburse pharmacies at a rate different from what it charges the plan.

If that flexibility exists in the contract, spread pricing exists in practice.

Ask: Does the contract guarantee that the plan pays exactly what the PBM pays the pharmacy, dollar for dollar?

How Revenue Is Structured

A fully disclosed PBM should be able to name every source of revenue it receives in connection with your plan.

If the contract references a single administrative fee but doesn't explicitly prohibit other revenue streams, that silence leaves room.

Ask: Can the PBM list, in writing, every revenue source connected to your pharmacy benefit?

What's Excluded from Reporting

Audit rights matter, but only if they cover the full picture. Some contracts permit audits of rebates but exclude specialty programs, certain pharmacy channels, or manufacturer agreements.

Ask: Does your audit right extend to every channel, program, and payment type associated with your plan?

DisclosedRx operates as The Fiduciary and The Fully Disclosed PBM®, providing employer health plans with complete visibility into pharmacy benefit costs and contractually obligated pass-through of all rebates and pricing.