Providing drug price predictability by removing risk for customers.

Pharmacy benefit specialists like Express Scripts exist to ensure patients have safe access to the medications they need and to keep drug costs down by negotiating the price of prescription drugs with manufacturers and retail pharmacies. We work with health plans, businesses, and others to help them design tailored benefits plans that best balance cost, coverage, and patient experience to meet individual needs. Our clients ultimately have control over what type of drug benefit is provided and how Express Scripts is compensated for our work. One tool that is frequently used to manage the high prescription drug prices set by manufacturers is referred to as risk mitigation or spread pricing. For many clients, it’s a preferred and transparent way to keep drug costs predictable and reduce risk.

A spread pricing arrangement is one of several options that plan sponsors can choose to adopt. Under a spread pricing arrangement, employers have price certainty for prescription drug benefit payments to pharmacies and transfer the risks associated with daily fluctuations in drug prices onto the pharmacy benefit specialist. In turn, the pharmacy benefit specialist negotiates with network pharmacies on the cost of filling prescriptions. Whether that negotiation yields a higher or lower price than what was agreed upon between the plan sponsor and pharmacy benefit specialist, the plan sponsor’s risk is mitigated. If the negotiated pharmacy rate is more than what was agreed upon, the pharmacy benefit specialist takes the loss. If the negotiated rate is less, the pharmacy benefit specialist earns a margin.  This price certainty is valuable to patients at a time of ever-rising list prices for medications, and that’s the benefit of spread pricing in some cases. Spread pricing also encourages active and aggressive rate negotiations by harnessing market forces to achieve the lowest drug prices, which results in pharmacy benefit specialists being able to pass on savings to clients and patients.   

• Policymakers should continue to allow health plans, companies, labor unions, and other types of clients to choose the arrangements that work best for them, whether it be risk mitigation (spread pricing) or other value- or fee-based structures. Limiting or eliminating spread pricing would take away choice and increase risk, while doing nothing to bring down the cost of prescription drugs for businesses and people across the country.