Top 3 Things You’ll Learn
- Arguments on both sides of the drug pricing debate
- The relationship between drug prices and rebates
- Benefit of client-friendly contract language
In a 2019 article published in the Wall Street Journal, drug manufacturers blamed pharmacy benefit managers (PBMs) as the reason for high drug prices. This finger-pointing indicates a shift in drug makers’ typical defense of justifying high prices as a necessity for new drug research and development. Now, they are saying that drug rebates given to PBMs are responsible for their price increases, turning attention away from their profit margins. In fact, they claim their profits are suffering and that their budgets justify the drastic price hikes that payers and consumers face each year. According to them, the PBMs are to blame for demanding higher rebates and not passing those to their clients.
Drug makers and #PBMs continue to blame each other for high Rx prices, but the data shows no correlation between drug prices and rebates.
Correlation of Drug Prices and Rebates
Pharmaceutical manufacturers have long argued that they could lower their list prices if they didn’t have to pay rebates, while PBMs argue that high list prices demand negotiations for greater discounts to keep drugs affordable for payers and members.
If the drug makers’ argument was true, there should be a high correlation between rebates and list prices – a claim that has been debunked by recent studies:
- Research commissioned by the Pharmaceutical Care Management Association (PCMA), a trade group for PBMs, found that drug makers’ price increases are unrelated to rebates.
- A separate report released by CVS Health in 2018 also shows no relation between price increases and average rebates. Per the CVS report:
“…our data show that in many cases list prices are increasing faster for drugs with smaller rebates than for medications with substantial rebates. Revlimid, manufactured by Celgene, is a good example. The price has tripled since 2005 to more than $18,000, yet there are almost no rebates.”
We Can Be Your Advocate
Drug rebates are not a revenue source for RxBenefits. Our client-friendly contracts pass through 100% of the rebates we receive to our clients. From contracting to clinical management, we have always worked on behalf of our clients to find low-cost solutions to help keep pharmacy benefits affordable and sustainable.