The skinny on spread pricing
Express Scripts negotiates discounts with retail pharmacies and other providers. Clients can choose spread pricing to help pay for the services Express Scripts provides
Some clients choose a traditional pricing model known as spread pricing. This model works for many clients looking to mitigate risk and keep their monthly drug spend predictable. Other clients opt to pay what the PBM pays the pharmacy for each prescription, which is known as pass through pricing.
With spread pricing arrangements, the PBM and client agree to a guaranteed rate for prescriptions. If the PBM cannot negotiate a rate that is higher than the guaranteed amount set with the client, the PBM covers the costs. This means payers are protected from uncertainty around prescription costs.
Clients choose how they want to structure their benefits – to best balance cost, coverage and the needs of their employees and populations – and select a pricing model that works best for their needs.
How Spread Pricing Works
Spread refers to the difference between the Express Scripts-negotiated price paid to network pharmacies and the price paid by a client to us.
We protect our clients from risk. Whether our negotiations with pharmacies deliver a higher or lower prescription drug discount than what we originally agreed upon with our clients – our clients’ costs stay the same.
- When the net price is less than the price paid by the client, PBMs retain the difference, or the “spread.”
- When the net price is more than the price paid by the client, PBMs must assume the risk and pay the difference, or the “spread.”
Fully transparent view. Clients receive cost details for each pharmacy claim – and can audit network claims annually.
Contract terms. A client’s typical contract term is three years with the opportunity to renegotiate pricing based on changes in the market environment.
Spread pricing is used in many industries – from automotive to retail
Spread pricing is not unique to Express Scripts or PBMs. In fact, spread pricing is used across the prescription drug supply chain – from manufacturers to pharmacies – and across the broader health care industry. It is also used in many other industries from retail to automotive to food.