Resources & Insights

Is Your PBM Working for Your Benefit?

November 14, 2023

Mike Burch
Senior Vice President & Partner at CCIG

A Pharmacy Benefit Manager (PBM) acts as an intermediary between prescription drug manufacturers, pharmacies, and health plan sponsors. Much of the PBM’s work goes on behind the scenes, but that does not negate the importance of employers and leaders asking the right questions and digging deeper into how their plans are structured – because it can have six-figure financial implications.


Understanding Traditional vs. Pass-Through PBMs

Let’s start with an overview of the two types of PBMs:

  • Traditional: The PBM sources the prescriptions for the health plan, but the PBM retains any kickbacks or manufacturer rebates as profit.
    • These are typical with bundled health plan options.
    • Bundled simply means the carrier controls all the components, i.e. network, stop loss insurance, and PBM.
  • Pass-Through (or Transparent): The PBM sources the prescriptions for the health plan, charges an administrative fee, and passes the rebates on to the health plan.
    • Pass-Through PBMs are more common with custom-built plans.
    • Design-build plans are built with third-party stop loss, leasing network coverage, and PBMs.

Rather than the rebates going back into the PBM’s pockets, many employers have the opportunity to retain those rebates with a Pass-Through PBM. While it may not be an option for every company (typically, those with 100 or more employees are good candidates), it’s certainly worth looking into.

Choosing Transparency Over Traditional: One Company’s Story

One of our clients had an annual health plan spend of around $14 million, but they weren’t able to separate their Traditional PBM from their bundled plan.

We walked them through our design-build process and created a customized plan with a Pass-Through PBM model. After analyzing the medications used by their plan, data showed over $1 million in rebates that their Traditional PBM had retained.

With a Pass-Through PBM, those rebates go back to the company and not the PBM. Of course, every company will see different results with a PBM, but the financial opportunity is significant.

Take Control Over Your Costs

We know that navigating the complexities of pharmaceutical and health plans can be daunting.

Start the process by asking your broker a few questions about your pharmacy plan, like:

  • Is our PBM structured as a Traditional or Pass-Through?
  • If it’s Traditional, why haven’t we explored Pass-Through?
  • What would it take to switch to a Pass-Through approach?
  • What would the financial benefits be if we switched to a Pass-Through approach?

There’s too much at stake to stick with the status quo. If you’re working with a sophisticated broker, you should review these options year after year to ensure your plan works in your favor.

Whether you have questions about your PBM model or want to explore your options, we’re here to help. Reach out to me or my team at CCIG ( to learn more.

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