The Rebate Shell Game: How Traditional PBMs Turn Your Savings Into Their Revenue

Employers invest heavily in pharmacy benefits expecting cost control and value. Yet many PBM contracts contain sophisticated structures designed to extract revenue while claiming Full Disclosure.

How Rebates Become Revenue

Traditional PBMs negotiate substantial rebates with drug manufacturers. These rebates should flow directly to you. Instead, many PBMs reclassify these rebates as "data access fees," "network optimization charges," or "compliance support fees." The rebate gets passed through, but the reclassified portion stays with the PBM. You believe you're receiving 100% of rebates while actually seeing only a fraction.

Common Tactics

Junk Fees - Unexpected charges for reporting, data analysis, or compliance support that rarely appear in initial proposals but substantially inflate final costs.

Spread Pricing - PBMs bill you one amount while reimbursing pharmacies less, pocketing the difference. You struggle to detect this because the PBM controls information on both sides.

Vague Performance Guarantees - Contracts promise rebate minimums, but imprecise measurement definitions let PBMs interpret results in their favor while technically meeting obligations.

Each dollar retained through fee manipulation should have reduced your pharmacy spend or benefited your members. For specialty medications with significant rebates, this compounds into substantial costs over time.

What You Should Demand

Complete Revenue Disclosure: Every revenue source clearly identified: administrative fees, retained rebates, manufacturer relationships, all compensation.

Contractual Fiduciary Commitment: A Fiduciary PBM is contractually and ethically bound to act in your best interests, not as marketing language but as enforceable obligation.

Clear Contract Definitions: Precise terms for what constitutes rebates, how pass-through is calculated, what's included in fees, and how guarantees are measured.

Detailed Reporting: Regular access to comprehensive data showing actual costs, rebate amounts, and all fees charged.

Questions for Your Current PBM

Can they identify every dollar received from manufacturers, including amounts labeled as fees rather than rebates?

Will they commit contractually to acting as your fiduciary?

If these questions create evasive responses, you're experiencing the opacity that enables rebate retention and fee manipulation.

Your Next Step

Plan sponsors have a fiduciary duty to scrutinize PBM relationships for retained rebates and undisclosed fees. The complexity in traditional contracts is not accidental. It camouflages financial arrangements that benefit the PBM at your expense.

DisclosedRx eliminates these conflicts entirely. When you're ready for complete visibility into your pharmacy benefit costs, we're ready to show you what genuine partnership looks like.

DisclosedRx operates as The Fiduciary and Fully Disclosed PBM®, providing plan sponsors with complete visibility into pharmacy benefit costs while maintaining contractual obligations to act in their best interests.