|...I was under the impression PBMs already favored lower-cost generics?|
TransparentRx has favored lower-cost generics over higher cost brand drugs, regardless of rebates, for almost a decade! In fact, we've shunned potential business from employers who viewed rebates as "free" money and wanted to steer our formulary toward that end. It will be interesting to see if the conflicts of interests and misaligned incentives, some brokers and consultants benefit from, begin to dissipate in favor of putting the needs of members and employers first. It's time we start measuring value across all stakeholders with radically transparent data and conversations.
Under the current model, drug manufacturers set a list price for their medications and negotiate a rebate off that price with PBMs in exchange for having their medicines placed on a list of covered and preferred medicines. Experts say it’s not always clear who gets the rebate, but part of it goes to employers or insurance companies while PBMs also keep a percentage. This model leads to higher costs for patients as drugmakers increase list prices to offset the cost of rebates.