The Supply Chain Credit Shell Game: How Traditional PBMs Relabel Rebates to Keep Your Money

Plan sponsors nationwide are discovering an unsettling truth: even when their PBM contract promises "100% rebate pass-through," significant money is being kept from them through clever relabeling schemes.

How the Shell Game Works

Supply chain credits are rebates that have been deliberately renamed so the PBM can retain a portion while technically honoring their contract language.

Here's a typical scenario: A rebate aggregator sends a PBM $1 million in rebates one year. The following year, instead of the expected increase, they continue sending exactly $1 million labeled as "rebates." But now there's an additional $200,000 payment labeled as a "business collaboration credit" or "supply chain credit."

Since the contract only requires passing through "rebates," the PBM keeps this additional $200,000. The rebate travels from manufacturer to aggregator (sometimes a shell company in another country), gets relabeled, and the PBM pockets what should have been additional savings.

The Relabeling Playbook

Traditional PBMs rebrand rebates using various names:

• Data fees for reporting services

• Network access fees for infrastructure costs

• Administrative charges

• Collaboration payments

• Brand credits

  
  

Each achieves the same goal: keeping money that belongs to the plan sponsor while maintaining technical contract compliance.

Why Plan Sponsors Can't Catch It

Even sophisticated employers with experienced consultants struggle to uncover these practices. Without contractual provisions that bind the PBM to disclose all revenue sources and act in the plan's best interest, sponsors cannot verify they're receiving everything they've earned.

The barriers include vague contract definitions, complex payment flows through multiple intermediaries, limited audit rights, and PBM control over the data needed to verify complete pass-through.

The DisclosedRx Difference

DisclosedRx operates as The Fiduciary and Fully Disclosed PBM®, contractually bound to act in the client's best interest.

Two revenue sources, period: An administrative fee and 25% of savings generated through enhanced programs. Plan sponsors receive the remaining 75% of program savings, delivering a 200% return on investment. Not a single dollar comes from any other source.

100% rebate pass-through: Every rebate dollar flows directly to the plan sponsor. No relabeling, no shell companies, no creative categorization.

100% pricing pass-through: Plan sponsors pay exactly what DisclosedRx pays. No spread pricing, no markup.

Guaranteed savings: Typically 14 to 20% of gross drug spend through Agile Channel Management programs. If targets aren't met, DisclosedRx writes a check for the difference.

Real Performance, Not Managed Minimums

Traditional PBMs often provide aggressive pricing guarantees but manage their performance to barely meet these thresholds, keeping any excess savings.

DisclosedRx does the opposite.

When proposing pricing, DisclosedRx provides both a conservative guarantee and the actual effective rate clients can expect. If performance exceeds the guarantee, the plan sponsor receives the full benefit of that improved performance—not the PBM.

What Plan Sponsors Should Demand

• Clear contract definitions with no room for creative interpretation

• Complete revenue disclosure with contractual provisions preventing undisclosed payments

• Genuine pass-through provisions for all payments from all sources, regardless of labeling

• Audit rights to examine all agreements affecting pharmacy benefits

• Performance guarantees backed by financial penalties

• Fiduciary commitment contractually binding the PBM to act in the plan sponsor's best interest

  
  

The Bottom Line

Every year with a traditional PBM practicing these tactics represents significant lost savings. Supply chain credits and relabeled rebates can easily total hundreds of thousands or millions of dollars annually, money that should be reducing plan costs or improving member benefits.

DisclosedRx offers an alternative built on Full Disclosure, contractual accountability, and measurable results. As The Fiduciary and Fully Disclosed PBM®, we provide plan sponsors with complete visibility into all financial aspects of their pharmacy benefits while guaranteeing meaningful cost reductions.

The money traditional PBMs are keeping through supply chain credits and rebate relabeling schemes belongs to you and your members. It's time to take it back.