Drug Pricing and the Role of Drug Rebate Aggregators.
This report was published in March 2018. We have published a new report in February 2019 titled Drug Rebate Aggregators and Checklist for Purchasers.
The benefits world will be rapidly impacted this year from different directions. The proposed comprehensive changes being developed will affect all stakeholders in healthcare to include: manufacturers (drug, device, diagnostic), employers and self-funded plans, patients/members, supply chain (health plans, PBMs, wholesalers, pharmacies), and providers (hospitals/health systems, clinics, and prescribers).
There are many forces driving the elimination of drug rebates beyond just offering transparency or POS sharing.
For all stakeholders in the U.S. healthcare market, it is important to understand how today’s pharmacy benefit model contributes to higher costs in the supply chain and identify (A) who are the players (B) determine how to increase transparency and reduce higher price claims and (C) drive efficiency with quality care.
Rebates from drug manufacturers have been growing as a share of total drug costs for Medicare, Medicaid, and commercial health plans. Pharmacy Benefit Managers (PBMs) negotiate rebates on behalf of plan sponsors, including insurers and employers.
A rebate is a discount on a medication a drug manufacturer provides to the PBM in return for the PBM covering the manufacturer’s drug product. Since PBMs create the formularies that the plan sponsor will cover they can negotiate better prices for certain drugs (often name brand) when there are other less expensive equivalent medications that could be utilized.
The percentage of these rebates shared with plan sponsors continues to be a source of controversy, as PBMs are thought to retain a high percentage rather than share these rebates.
PBMs typically negotiate rebates with drug manufacturers based on access, volume, or market share within a particular therapeutic class. The PBM may hold rebate contracts, which by contract terms are typically confidential, or aggregate volume claims with a subcontractor.
Drug Rebate Aggregators act as an aggregation point for sub-contracted entities to submit their rebate invoices or drug administration information and then combines data into consolidated rebate invoices for transmittal to manufacturers. Drug Rebate Aggregators assist the needs of various pharmacy organizations in aggregating their rebates with multiple entities to maximize rebates.
AMI’s new report answers the following:
- What are drug rebates and how do they impact industry stakeholders?
- How are PBMs compensated and what role does rebates have in the compensation?
- What role does rebates play in Medicare and Medicaid?
- How do rebates impact plan sponsors (health insurers and employers)?
- How do drug rebate aggregators fit into the drug pricing issue?
- Who are the leading drug aggregator companies?
- What products and services do each of the drug aggregators offer?
AMI’s 2018 report, 80+ pages, Table of Contents:
Drug Rebates – pgs. 6-17
- Introduction from Dr. F. Randy Vogenberg
- Health Spending Growth
- PBM Background
- WAC/AMP Pricing
- PBM Compensation
- Direct and Indirect Renumeration (DIR) Fees
- Drug Rebate Payments
Public Sector: Medicare and Medicaid – pgs. 18-22
- Medicaid Drug Rebate Program
- Medicare Part D/Medicare Part B
Pharmaceutical Manufacturers – pgs. 23-28
- Rebate Agreement/Provisions
- Outcomes-Based Contracts
Health Insurers – pgs. 29-32
- Drug Benefit Coverage Programs
- Rebate Agreements Background
- Co-Pay Accumulator Programs
Employers – pgs. 33-34
- Pharmacy Carve-in/Carve-out
Commercial/Government Drug Rebate Aggregator Profiles – pgs. 35-52
- Abarca Health – pgs. 34-35
- Conduent Inc. – pgs 36-37
- CVS Health/Caremark – pgs. 38-39
- DST Pharmacy Solutions – pg. 40
- Express Scripts – pgs. 41-42
- OptumRx – pgs. 43-46
- PioneerRx – pg. 47
- Ventegra – pgs. 48-49
- WellDyneRx – pg. 50
Commercial Drug Rebate Aggregator Profiles – pgs. 53-77
- BeneCard PBF – pgs. 52-53
- eMax Health Systems – pgs. 54-55
- Gateway Health Partners – pgs. 56-57
- Health Delegates – pgs. 58-59
- IntegriScripts, LLC – pg. 60
- MedOne Healthcare Systems – pg. 61
- PBIRx – pgs. 62-63
- Pharmaware, LLC – pg. 64
- Quantuvis – pg. 65
- RemedyOne – pgs. 66-67
- RxAdvance – pgs. 68-70
- RxPreferred Benefits – pgs. 71-72
- Summit PBM – pg. 73
- TransactRx – pgs. 74-75
Government Drug Rebate Aggregator Profiles – pgs. 78-86
- Artia Solutions – pgs. 77-78
- Change Healthcare – pgs. 79-81
- CNSI – pg. 82
- The Rodenhizer Group – pgs. 83-84
References – pgs. 87-88
- Rebates as a Share of Spending on Drugs by Insurer Category – pg. 6
- An Example of the Pharmaceutical Supply Chain – pg. 8
- Type of Rebate Arrangement – pg. 14
- Janssen Average List Price Changes, U.S. Portfolio – pg. 24
- Novo Nordisk Provisions for Sales Rebates – pg. 25