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Pharmacy Benefit Manager Fees Must Be Reported on Schedule C

February 22, 2010 By: Nadia Category: Medtipster, Prescription News

Source: U.S. Department of Labor, 2/2010

The Department of Labor published FAQs to supplement FAQs published in July 2008, and to provide further guidance in response to additional questions from plans and service providers on the requirements for reporting service provider fees and other compensation on the Schedule C of the 2009 Form 5500 Annual Return/Report of Employee Benefit Plan. Inquiries regarding these supplemental FAQs may be directed to EBSA’s Office of Regulations and Interpretations at 202.693.8523.

The new FAQs — numbers 26 and 27 — note that PBMs perform many services for which they are compensated, including services as a third-party administrator, claims processor, and developer of the plan’s formulary and pharmacy network. The FAQs make clear that fees for these services would be reportable as direct compensation on Schedule C.

Q26: Pharmacy Benefit Managers (PBMs) provide services to plans and are compensated for these services in various ways. How should this compensation be reported?

PBMs often act as third party administrators for ERISA plan prescription drug programs and perform many activities to manage their clients’ prescription drug insurance coverage. They are generally engaged to be responsible for processing and paying prescription drug claims. They can also be engaged to develop and maintain the plan’s formulary and assemble networks of retail pharmacies that a plan sponsor’s members can use to fill prescriptions. PBMs receive fees for these services that are reportable compensation for Schedule C purposes. For example, dispensing fees charged by the PBM for each prescription filled by its mail-order pharmacy, specialty pharmacy, or a pharmacy that is a member of the PBM’s retail network and paid with plan assets would be reportable as direct compensation. Likewise, administrative fees paid with plan assets, whether or not reflected as part of the dispensing fee, would be reportable direct compensation on the Schedule C. Payments by the plan or payments by the plan sponsor that are reimbursed by the plan for ancillary administrative services such as recordkeeping, data management and information reporting, formulary management, participant health desk service, benefit education, utilization review, claims adjudication, participant communications, reporting services, website services, prior authorization, clinical programs, pharmacy audits, and other services would also be reportable direct compensation.

Q27: PBMs may receive rebates or discounts from the pharmaceutical manufacturers based on the amount of drugs a PBM purchases or other factors. Do such rebates and discounts need to be reported as indirect compensation on Schedule C?

Because formulary listings will affect a drug’s sales, pharmaceutical manufacturers compete to ensure that their products are included on PBM formularies. For example, PBMs often negotiate discounts and rebates with drug manufacturers based on the drugs bought and sold by PBMs or dispensed under ERISA plans administered by a PBM. These discounts and rebates go under various names, for example, “formulary payments” to obtain formulary status and “market-share payments” to encourage PBMs to dispense particular drugs. The Department is currently considering the extent to which PBM discount and rebate revenue attributable to a PBM’s business with ERISA plans may properly be classified as compensation related to services provided to the plans. Thus, in the absence of further guidance from the Department, discount and rebate revenue received by PBMs from pharmaceutical companies generally do not need to be treated as reportable indirect compensation for Schedule C purposes, even if the discount or rebate may be based in part of the quantity of drugs dispensed under ERISA plans administered by the PBM. If, however, the plan and the PBM agree that such rebates or discounts (or earnings on rebates and discounts held by the PBM) would be used to compensate the PBM for managing the plan’s prescription drug coverage, dispensing prescriptions or other administrative and ancillary services, that revenue would be reportable indirect compensation notwithstanding that the funds were derived from rebates or discounts.

More information to follow via our blog at

Walgreen to Acquire Duane Reade, Add New York Stores

February 17, 2010 By: Nadia Category: Medtipster, Prescription News, Prescription Savings

Nádia - your personal pharmacy cost adviser
Nádia – your personal pharmacy cost adviser

Walgreen Co., the biggest U.S. drugstore chain, agreed to buy Duane Reade Holdings Inc. from affiliates of Oak Hill Capital Partners for $1.08 billion, to expand in metropolitan New York. 

We are watching this closely as it relates to both chains discount generic programs. We anticipate Walgreens to eventually include their existing Prescription Savings Club within the Duane Reade locations.  In the meantime, please continue to visit to search for your generic drugs and their discount prices at both chains nationwide.

GlaxoSmithKline Requests A Temporary Halt On New Flu Vaccinations in Canada

November 23, 2009 By: Nadia Category: Medtipster, Prescription News

Nádia - your personal pharmacy cost adviser

Nádia - your personal pharmacy cost adviser

GlaxoSmithKline is suspending the use of 170,000 doses of its new H1N1 influenza vaccine in Canada. This is due to a higher-than-usual rate of reported side effects potentially linked to the vaccine.

Potential side effects were rooted from allergic reactions suffered by six people that experienced breathing difficulties and reduced blood pressure in the Canadian province of Manitoba. Side effects are very common for any medication, with a typical ratio of 1.5 : 170,000. It has been reported that all six recovered after a short time.

Flu Shots in the United States are unaffected and are still highly recommended by the AMA and CDC.

Find a flu shot closest to your home at

Uninsured Numbers Rising!

October 06, 2009 By: Nadia Category: Medtipster, Prescription News

Nádia - your personal pharmacy cost adviser

Nádia - your personal pharmacy cost adviser

The number of uninsured nationwide rose to 46.3 million in 2008, up 1.3% from 45.7 million the prior year, with 15.4% of the total population uninsured, according to the U.S. Census Bureau.

Our goal is to provide a road map for the 15.4% that have no insurance. is the best way to find medications at the right price. Whether it’s CVS Pharmacy, Kroger Pharmacy, Target Pharmacy, Kmart Pharmacy, Meijers Pharmacy, Walmart Pharmacy, Rite-Aid, Spartan Pharmacy, etc… The choice is yours! Medtipster offers the information, you do the rest.

Find your nearest Pharmacy by using

A&P working with ESI Medical to conduct flu shot clinics

October 06, 2009 By: Nadia Category: H1N1 News

Nádia - your personal pharmacy cost adviser

Nádia - your personal pharmacy cost adviser

The Great Atlantic & Pacific Tea Company has partnered with ESI Medical to conduct seasonal flu and H1N1 vaccination clinics in 250 stores in six states until Dec. 23. The company also is offering a “buy one, get one free” deal on flu shots to customers who use their Club Cards to purchase $100 worth of beauty care and health products.

Find your nearest A&P Pharmacy by using

Kroger Offers Flu Shots At Their 1,900+ In-Store Phamacies

September 18, 2009 By: Nadia Category: H1N1 News, Medtipster

Nádia - your personal pharmacy cost adviser

Nádia - your personal pharmacy cost adviser

The Kroger Companys Family of Pharmacies is making it easy and affordable for customers to take steps to keep themselves and their families healthy by getting seasonal flu immunizations early.

This year, Krogers more than 1,900 in-store pharmacies will again offer convenient access to seasonal flu vaccines at an affordable price. Flu vaccines will be administered by Krogers own Certified Immunizing Pharmacists for $25 per vaccine. During the 2008-2009 flu season, the Kroger Family of Pharmacies administered nearly 1 million flu vaccinations.

Find your nearest Kroger Pharmacy by using

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