In every Certified Pharmacy Benefits Specialist (CPBS) course I teach, there’s one topic that never fails to ignite strong reactions from retail pharmacists: DAW (Dispense as Written) codes. When we get to DAW 9, emotions run high. Pharmacists often take the floor for 10 minutes, venting about how others manipulate this code—and they have every right to be frustrated.
DAW codes play a crucial role in billing claims correctly to a patient’s insurance plan. These codes help insurance companies and PBMs determine how much to reimburse a pharmacy and whether a medication qualifies for full or partial coverage. If the pharmacy doesn’t bill a claim correctly, patients may not receive the right drug at the right price. While DAW 0 serves as the default and DAW 1 appears rarely, PBMs commonly drive DAW 9.
For plan sponsors, brokers, and consultants, DAW 9 often flies under the radar, even though it directly increases costs and wasteful spending. Normally, when a prescriber allows substitution, the pharmacy dispenses the generic because it’s the lower-cost alternative. But when DAW 9 is applied, the pharmacist is forced to dispense the brand-name drug for it to be covered. This happens simply by switching the DAW code in the system from 0 to 9.
In a retail pharmacy, the pharmacy technician—not the pharmacist—often ensures the claim gets paid. When the system rejects a claim with DAW 0, the technician cycles through different DAW codes until the system accepts one. You might wonder, why would a PBM push this practice? One word: rebates.
If you’ve signed on with a non-fiduciary PBM that touts “$0 admin fees” on the pharmacy benefit or swaps rebates for medical benefit admin fee credits, how do you think they’re making money?
By keeping admin fees artificially low or diverting rebates, PBMs create hidden cash flow streams—DAW 9 being one of them. It allows them to increase their share of manufacturer revenue (rebates), directly inflating costs for plan sponsors and patients.
In 2025, working with a PBM that doesn’t provide radical transparency is fiscally reckless. Yet, most plan sponsors don’t even realize what’s happening. What they don’t know is costing them—big time.
Next Steps to Remedy DAW 9 Abuse:
- Audit PBM Contracts: Ensure your PBM agreement explicitly prohibits the use of DAW 9 to manipulate rebates and increase brand drug utilization. Look for language that guarantees full transparency in formulary decision-making.
- Demand Fiduciary Accountability: Work with a fiduciary PBM that is legally obligated to act in your best interest, ensuring cost-effective prescribing and rebate pass-through.
- Monitor Prescription Claims Data: Analyze claim-level data to identify DAW 9 usage trends and flag unusual brand drug dispensing patterns. This will help pinpoint where excess costs are coming from.
- Educate Pharmacy Teams and Providers: Ensure prescribers, pharmacists, and pharmacy technicians understand the financial impact of DAW 9 and encourage them to resist PBM-driven brand dispensing.
- Implement Stronger Plan Controls: Work with your PBM to set up formulary and prior authorization rules that prevent unnecessary brand drug dispensing through DAW 9.
By taking these steps, plan sponsors can protect their pharmacy spend, ensure patients receive the most cost-effective medications, and shut down hidden PBM revenue schemes.
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