Negotiation of discounts from pharmacies and rebates (i.e., discounts for formulary placement) are two of the key services offered by PBMs and health plans to help manage drug spend for employers. Pharmacy reimbursement is currently comprised of two elements; average wholesale price (AWP) for the drug ingredient(s) and a dispensing fee for the pharmacist services. In exchange for the volume of prescriptions associated with group drug plans, pharmacies extend a percentage discount off of AWP to employers and other drug benefit plan sponsors.
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