Pass-through contracts promise transparency. Without independent auditing, they often deliver the appearance of it. Here is where the money actually hides.
Pharmacy benefit managers sit between plan sponsors, pharmacies, and drug manufacturers, and their pricing models are engineered to be difficult to inspect. The industry's answer to years of criticism has been the pass-through contract, which promises that sponsors pay exactly what pharmacies are paid. It sounds like transparency. In practice, the label often outpaces the reality, and the gap is expensive.
The first place cost hides is the definition of pass-through itself. A contract may pass through ingredient cost while retaining spread elsewhere, in dispensing fees, rebate handling, or administrative charges that are not itemized. A sponsor reading a clean monthly summary sees a reasonable number and has no practical way to reconcile it against the thousands of individual claims that produced it. The summary is accurate and misleading at the same time.
The second place is MAC list management. Maximum Allowable Cost lists determine reimbursement for generics, and they can be updated frequently and asymmetrically. When the price a sponsor is charged and the price a pharmacy is reimbursed are governed by different lists, spread reappears under a different name. Detecting it requires repricing claims line by line against contracted terms, not sampling a handful and trusting the pattern.
Rebates are the third. Manufacturer rebates flow through the PBM, and the terms governing how much is retained versus passed on are often complex enough that even sophisticated benefits teams cannot verify the split from the data they are given. Money that should reduce plan cost can be reclassified in ways that are technically permitted and practically invisible.
This is why the real cost of pass-through auditing is not the audit fee, it is the cost of not auditing. Traditional annual reviews sample claims and lean on vendor explanations, which means systemic leakage survives review by design. A meaningful audit reprices the full claims history, checks every line against contracted terms and market benchmarks, and quantifies spread, MAC discrepancies, and rebate gaps as recoverable dollars.
When sponsors do this, the findings are frequently large enough to change the contract at renewal, not just recover past overpayments. In our work, independent repricing has produced roughly a 32% reduction in pharmacy claim costs, with the savings recurring because monitoring continues after the initial cleanup. The lesson for any plan sponsor is straightforward: a pass-through label is a starting point, not a guarantee. The only way to know you paid the real price is to check the real claims, all of them, with someone whose incentives are aligned with yours rather than with the spread.