Spread Pricing: What It Means for Independent Pharmacies

Spread pricing sits at the center of a growing share of pharmacy reimbursement disputes: a Pharmacy Benefit Manager (PBM) bills the plan sponsor one amount for a prescription and reimburses the pharmacy a lower amount, keeping the difference. The Federal Trade Commission (FTC) has now measured that practice at scale among the three largest PBMs, and several states have banned it outright in Medicaid. For an independent pharmacy, it rarely surfaces as a policy question. It shows up as a reimbursement rate that never matches acquisition cost, or a PBM audit finding built on a rate the pharmacy never agreed to.

How the Spread Is Built Into a Claim

At the point of sale, the pharmacy submits a claim and the PBM adjudicates it, reimbursing the pharmacy at a contracted rate that is often tied to a Maximum Allowable Cost (MAC) list the PBM sets and can revise. Separately, the PBM bills the plan sponsor, the employer or government program funding the benefit, a different amount for the same claim. Under spread pricing, the billed amount is higher than what the pharmacy received, and the PBM keeps the balance rather than passing it through as a disclosed fee. The pharmacy sees only its own reimbursement, with no visibility into what the plan sponsor was billed.

The FTC's Findings on PBM-Affiliated Pharmacies

The FTC's Second Interim Staff Report, Specialty Generic Drugs: A Growing Profit Center for Vertically Integrated Pharmacy Benefit Managers, released January 14, 2025, examined 51 specialty generic drugs at pharmacies affiliated with the three largest PBMs, Caremark Rx, Express Scripts, and OptumRx, from 2017 to 2022. The report found these affiliated pharmacies generated more than $7.3 billion in revenue above the drugs' estimated acquisition costs, with some markups running into the thousands of percent. Spread pricing specifically, billing plan sponsors more than the PBM reimbursed its own affiliated pharmacies, accounted for an estimated $1.4 billion of that total. The scope is specialty generics at the three largest PBMs' affiliated pharmacies, not a finding that every PBM applies spread pricing to every claim, but it is the clearest federal accounting yet of how large the practice can grow.

State Pass-Through Pricing Laws in Medicaid

States regulate spread pricing chiefly through Medicaid, where the state itself is the plan sponsor. Ohio was among the first to act: after a state audit found PBMs retaining an average of $5.70 per prescription in spread across its Medicaid managed care claims, Ohio required a pass-through pricing model effective January 1, 2019, under which the PBM collects only a disclosed fee and reimburses pharmacies exactly what it bills the state. More than a dozen other states have since adopted similar requirements in their own Medicaid managed care programs.

When Spread Pricing Disputes Surface in a PBM Audit

Pharmacies most often encounter spread pricing indirectly, through a reimbursement dispute or a PBM audit, rather than through direct disclosure. A pharmacy that appeals a below-cost MAC rate, or compares its reimbursement against acquisition cost, can surface a pattern consistent with an undisclosed spread. The remedy runs through the contract's audit appeal and MAC appeal processes, built on documented rates rather than the FTC report's national figures alone. A pattern of contested reimbursement can also factor into the network conduct review that leads to network termination in serious cases, and a recoupment demand issued during the same audit compounds the exposure. Our companion piece on what a PBM audit really costs covers how extrapolation turns a sampled finding into a full-lookback demand, and our guide to Prime Therapeutics audits covers one PBM's own findings and deadlines.

The spread a PBM keeps between what it bills the plan sponsor and what it pays the pharmacy is invisible to the pharmacy filling the prescription.

Why Early Legal Counsel Is Critical

It is critical that pharmacies retain experienced healthcare defense counsel as soon as a reimbursement dispute connected to spread pricing appears, whether inside an active PBM audit or a standalone MAC appeal. Early legal intervention can protect the pharmacy's rights, ensure the appeal is built on documentation the payer will credit, and preserve the pharmacy's position if the dispute escalates toward recoupment or network conduct review. Delaying counsel until after an appeal deadline has passed can foreclose defenses that were available at the outset.

How Health Law Alliance Can Help

Health Law Alliance defends pharmacies nationwide against PBM audit findings and the reimbursement disputes that accompany them, including matters where an undisclosed spread bears on the rate a pharmacy was paid. Our bench includes a former federal prosecutor and a former senior pharmacy benefit manager executive, background that shapes how we evaluate a contested rate. If your pharmacy is disputing a reimbursement rate or facing an audit finding tied to spread pricing, contact us for a free, confidential consultation.