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PBM 101: How does a PBM make money?
A PBM makes money in a multitude of ways, however, the three main revenue streams would be:
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ONE | Rebates: are discounts a PBM negotiates from pharmaceutical manufacture. These rebates can be difficult to calculate the true value and it is important to understand how the process works.
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TWO | Retail Spread: A PBM often negotiates a more aggressive discount from retail providers, such as Walgreens, CVS, and Rite Aid, than what they bill their clients. The difference between these two numbers is pure profit for the PBM.
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THREE | Mail Service Pharmacy: Many PBM companies operate their own mail order facility. This has become the most profitable revenue channel for a PBM. Clients need to be careful when considering a mail service pharmacy with the direct PBM company. Instead, the client should consider another vendor for this service rather than the PBM provider.
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