Posted on Apr 28, 2020


Negotiating Rebates is like Playing a Game without the Rules!: Post 1

Imagine playing a game for the first time but those you’re playing against only showed you some of the rules. How well do you think you’d do? Probably not very well.
Essentially, plan sponsors are in this position today when negotiating pharmacy rebates with their PBM or Carrier. The goal of the plan sponsor is to provide an effective pharmacy benefits plan but to do so on the most cost-effective basis. This goal although seemingly simple is almost unattainable for one reason. The industry is faced with a lack of disclosure around how PBM’s are being compensated.
Historically, on a single drug, a PBM would act as an administrator applying plan rules and copays for the plan sponsor, manage the delivery of prescribed drugs through the mail-order plan, and provide reporting to the plan sponsor on prescriptions filled at a local pharmacy. For putting certain drugs on a lower copay tier, the drug manufacturer provided rebates to the PBM who in turn provide a percentage of these rebates to the plan sponsor on a negotiated basis. Years ago, this was simple as the initial “rebate pie” was 100%.

Cont'd on post 2...
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