Painful prescription

  @FortuneMagazine October 10, 2013: 8:00 AM ET
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Schenk decided to figure out where Meridian's money was going and why its drug costs were escalating. That was no easy task because, like most PBM customers, Meridian received data only on what it was being charged for each employee prescription. Meridian didn't know what it cost the PBM to fill that order.


When he compared the two lists, the mild-mannered pharmacist was shocked: Express Scripts was making huge gross profits (known as "spreads" in the PBM world) ranging from $5 per order to many multiples of that. In one particularly extreme example, Meridian was billed $92.53 for a prescription for generic amoxicillin filled at an outside pharmacy. Meanwhile, Express Scripts paid $26.91 to Meridian's own pharmacy to fill the same prescription. That meant a spread of $65.62 on one bottle of a generic antibiotic.

Express Scripts vehemently insists it saves money for clients and that the vast majority are satisfied with its service. And like any company -- to state the obvious -- it's entitled to a profit. The question is, Who is making out better -- the PBM or its customers? Many experts say the former. They argue that many companies stick with traditional PBMs because drug pricing is so impossible to untangle that customers have no way to verify how much they're saving, if anything.

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