Transparent Contract Term Checklist
| Term | Transparent Provision |
|---|---|
| Rebate pass-through | 100% of rebates passed to employer; no retention |
| Spread pricing | No spread pricing; employer pays actual pharmacy cost |
| DIR fees | No DIR fees; or 100% passed to employer |
| Administrative fees | All-in administrative fee; no other revenue sources |
| Audit rights | Full audit rights including pharmacy invoices and manufacturer contracts |
| Data ownership | Employer owns all claims data; full portability |
| Fiduciary status | PBM accepts ERISA fiduciary status |
Negotiation Leverage
Negotiating transparent contract terms requires leverage. Key leverage points: (1) competitive bids from transparent PBMs; (2) audit findings that document current contract violations; (3) employer size — larger employers have more leverage; and (4) market knowledge — knowing what other employers have negotiated. A pharmacy consultant with PBM negotiation experience can significantly improve negotiation outcomes.
Contract Review
Pro Tip
Have a pharmacy consultant or ERISA counsel review your PBM contract before signing. PBM contracts are complex and contain provisions that are not obvious to non-experts. A contract review typically costs $5,000–$15,000 and can identify provisions that cost the employer significantly more than the review fee.