How Is National CooperativeRx Different Than a PBM?

Emily Torgerson  •   October 27, 2021

National CooperativeRx: our name says it all. We are a not-for-profit pharmacy benefit cooperative that provides pharmacy benefits to hundreds of self-funded member-owned groups and approximately 375,000 participant lives throughout the country. Cooperatives are known for honesty, openness, and social responsibility and we proudly operate with the Six Cooperative Principles at the core of all our processes. These principles are a key reason we stand out from other organizations and are consistently chosen by agents, consultants, and TPAs.

Six Cooperative Principles

Voluntary and Open Membership
Cooperatives are voluntary and open organizations. Any self-funded group may join the Cooperative regardless of industry type, group size, location, or demographics.

Democratic Member Control
Cooperatives are democratic organizations controlled by their members. Active participation is essential in setting their policies and making decisions. Our members may participate in our Board and represent their organization.

Member Economic Participation
Members contribute to, and control, the capital of their cooperative. Members pay dues and each year they receive excess proceeds.

Autonomy and Independence
Cooperatives are autonomous organizations controlled by their members. Members are guaranteed of democratic control within agreements with other organizations, including governments.

Education, Training, and Information
The Cooperative provides educational resources and training for its members, including educational briefs, videos, and a biweekly e-newsletter.

Cooperation Among Cooperatives
Being a part of a large cooperative movement strengthens each individual organization.

What is a Pharmacy Benefit Manager (PBM)?

Although uncommon, sometimes our Cooperative gets mistaken for a PBM. PBMs are companies that manage prescription drug benefits on behalf of health insurers, Medicare Part D drug plans, employers, and other payers. By negotiating with drug manufacturers and pharmacies to control drug spending, PBMs have a significant behind-the-scenes impact in determining total drug costs for insurers, shaping patients’ access to medications, and determining how much pharmacies are paid.1

PBMs operate in the middle of the distribution chain for prescription drugs. That’s because they:

  • Develop and maintain formularies of covered medications on behalf of payors, which influence which drugs individuals use and determine out-of-pocket costs.
  • Use their purchasing power to negotiate rebates and discounts from drug manufacturers.
  • Contract directly with individual pharmacies to reimburse for drugs dispensed to beneficiaries.2

Our Relationship with PBMs

National CooperativeRx negotiates with a PBM to provide payors with expertise and purchasing power in prescription drugs. Our current PBM is CVS Caremark and we have partnered with them since our inception in 2003. We work directly with our members to make clinical and plan design recommendations in their best interest. Because we are member-owned and member governed, our members’ interests always come first. While some PBMs have faced growing scrutiny about their role in rising prescription drug costs and spending, we pride ourselves on honesty and transparency.

Here at the Cooperative, we pass 100% of all discounts and rebates back to members. Our model offers the benefit of transparency so our members can see exactly what is paid out for all pharmacy transactions. Through expert negotiations, we do not keep any funds, but instead ensure our members receive their expected drug rebates. It’s one of the many benefits to partnering with a not-for-profit cooperative for pharmacy benefits.

Co-op Month

October is Co-op Month — an important time for the National CooperativeRx staff and membership. It’s the time when we reflect on the work we do and remember that our unique business model gives us the strength to ensure:

Expertly negotiated pricing

Bulletproof contract language

Excellent service guarantees

All of this is possible because our members buy into one contract that allows us to achieve results together that otherwise could not be achieved alone. That’s the purchasing power of a service cooperative.

 

  1. Health Policy Brief Series: Prescription Drug Pricing(Health Affairs, Sept. 2017).
  2. Elizabeth Seeley and Aaron S, Kesselheim, Pharmaceutical Benefit Managers: Practices, Controversies, and What Lies Ahead (Commonwealth Fund, March 2019).