PBM Revenue Stream Overview
| Revenue Stream | Description | Disclosed? |
|---|---|---|
| Administrative fees | Per-claim fees paid by employer | Yes |
| Rebate retention | Portion of manufacturer rebates retained by PBM | Partial |
| Spread pricing | Difference between pharmacy reimbursement and employer charge | Rarely |
| DIR fees | Fees charged to pharmacies; not passed to employer | Rarely |
| Mail order margin | Profit on drugs dispensed through PBM-owned mail pharmacy | Rarely |
| Specialty pharmacy margin | Profit on specialty drugs dispensed through PBM-owned specialty pharmacy | Rarely |
Spread Pricing
Spread pricing is one of the most opaque PBM revenue streams. The PBM reimburses the pharmacy at one rate (e.g., $10 for a generic drug) and charges the employer a higher rate (e.g., $15). The $5 spread is PBM revenue — but it is not disclosed as a fee. Spread pricing is most common for generic drugs and can add 10–30% to generic drug costs.
DIR Fees
IQ Insight
DIR (Direct and Indirect Remuneration) fees are fees charged to pharmacies by PBMs — ostensibly for quality performance — that are not passed to the employer. DIR fees reduce pharmacy reimbursement after the fact, creating cash flow uncertainty for pharmacies. The employer does not benefit from DIR fees — they are pure PBM revenue. Transparent PBM contracts eliminate DIR fees or pass them to the employer.