Can Cost-Plus Pharmacies Save a Self-Funded Plan Money?

How cost-plus pricing works

Traditional pharmacy pricing starts from a list price, such as average wholesale price (AWP), and applies discounts. Because list prices for generics can be many times their real cost, "AWP minus 85%" can still be expensive. Cost-plus pricing starts from the other end: what the drug actually costs, plus a disclosed markup.

The best-known example, Mark Cuban Cost Plus Drug Company, launched in January 2022 and prices drugs at its cost plus a 15% markup, a $5 pharmacy service fee, and a $5.25 shipping fee. By the end of 2023 it listed more than 2,200 drugs, mostly generics. source

Generics matter here because they're about 90% of prescriptions but only about 12% of drug spend. source They're also where pricing is least transparent, so they're where overpayment tends to hide.

A common moment of discovery goes like this. An HR manager fills a prescription for her own family, a generic heartburn medicine, and notices the plan's explanation of benefits shows a total cost of about $60 for a 30-day supply. Out of curiosity she looks it up on a cost-plus pharmacy's website and finds the same drug, same strength, for under $10 including fees. One drug doesn't break a budget. But it makes her wonder how many of the plan's other generics look the same, and that question is exactly where a benchmarking project starts.

What the research says

Sources: 2022 study 2026 study.

The 2026 study also found the largest median savings in oncology, urology, psychiatry, neurology, and cardiology generics, with examples including abiraterone, imatinib, and rivaroxaban. source

Plan savings vs. member savings

Most headlines compare cost-plus prices to what members pay at the counter. A self-funded plan cares about total cost: what the plan pays plus what the member pays. Those can move differently:

• If a member pays cash at a cost-plus pharmacy outside the plan, the plan pays nothing for that fill. That can look like savings, but the member's spending doesn't count toward their deductible unless the plan integrates it. source
• If the plan routes claims to a cost-plus pharmacy through its PBM or network, the plan captures the lower price directly, and the member's cost share can drop too.
• For low-cost generics (under about $15 in cost share), insurance already works fine for most members. The 2026 study found cost-plus was cheaper for only 15% of prescriptions overall.

Four ways self-funded plans use cost-plus

1. As a benchmark. Compare what your plan paid for its top generics against published cost-plus prices and NADAC (the government's survey of pharmacy acquisition costs). Large, consistent gaps point to pricing problems in your PBM contract.
2. In the network. Some PBMs and administrators can add cost-plus pharmacies to the network, or route specific generics to them, so claims process normally and count toward deductibles.
3. Through plan design. Some plans reimburse or credit member cash purchases at approved pharmacies toward deductibles, or set $0 cost share for drugs filled through a lower-cost channel.
4. At contract renewal. Use cost-plus pricing as leverage. Ask your PBM to explain, drug by drug, why the plan should pay more than a published cost-plus price for the same generic.

How to benchmark: a simple example

Benchmarking doesn't require special software. For each of your top generics, line up three numbers per 30-day supply:

Hypothetical figures for illustration only. Real prices vary by drug, strength, quantity, and date.

Multiply the gap by your annual claims for that drug and you have a dollar figure to take to your PBM. One drug won't change your year, but plans often find the same pattern across dozens of common generics. Focus first on drugs with the largest total gap, not the largest per-claim gap.

Questions to ask your PBM

1. How are generic drugs priced under our contract, and what are the maximum allowable cost (MAC) lists and guarantees?
2. For our top 50 generics, what did the plan pay per unit compared with what you paid the pharmacy?
3. Can we add a cost-plus pharmacy to our network, or route specific generics to one, with claims counting toward deductibles?
4. Does our contract restrict carve-outs or alternative pharmacy channels?
5. Can members' approved cash purchases be credited toward deductibles and out-of-pocket maximums?
6. How would moving generic volume affect our pricing guarantees on other drugs?

That last question matters. Some contracts measure guarantees as averages across a basket of drugs, so moving the cheapest generics elsewhere can change how the remaining claims are measured. Model the full contract, not one drug at a time.

Limits and watch-outs

• Mostly generics. Cost-plus savings are concentrated in generics. Brand and specialty drugs are a bigger share of spend and need different levers.
• Mail delivery. Online cost-plus pharmacies ship, which doesn't suit urgent prescriptions.
• Fragmented records. Cash fills outside the plan don't appear in plan claims, which affects drug interaction checks, adherence programs, and reporting.
• Contract terms. Some PBM contracts restrict network changes or carve-outs. Check before you move claims.

Where TrumpRx fits

TrumpRx.gov launched in early February 2026 with roughly 43 drugs, listing cash prices and directing users to manufacturer or discount purchase options. It is cash-only and generally sits outside employer plans, so purchases don't count toward deductibles. source The same month, the FTC settled with Express Scripts; among other terms, the settlement calls for making direct-to-consumer options available within standard offerings where legally permissible. source Expect more plan-integrated cash-price options over time.

Cost-plus checklist for self-funded plans

1. Pull your top 50 generics by plan spend, with plan-paid amount per unit.
2. Benchmark each one against published cost-plus prices and NADAC plus a reasonable dispensing fee.
3. Flag gaps where the plan consistently pays several times the benchmark.
4. Ask your PBM to explain or correct the gaps, drug by drug.
5. Check your contract for network, carve-out, and exclusivity restrictions.
6. Decide how to integrate cost-plus: network, routing, or deductible credit.
7. Model total cost plan plus member, not member savings alone.
8. Communicate clearly so members know when and how to use the option.

Frequently asked questions