Drug Rebates: New Executive Order Only Addresses Part of the Problem

By Steven R. Newmark, JD, MPA

Medically reviewed by Patricia Salber MD, MBA

Drug rebates often mean consumers pay more for their prescription drugs. Manufacturers raise list prices to cover PBM rebates. Then, we pay a percentage of this higher list price.

By the time you pay your co-pay or co-insurance for your drugs, the price has already been increased by middleman rebates,(Photo Source: iStock Photo)

Come get your free money! Buyers love rebates, right? It means a discount on the purchase price to the benefit of the customer, right? Well, not always. And it certainly doesn’t occur in the arena of prescription drug rebates.

Most people agree that prescription drugs have made life better. It is also evident that the cost of these medications is simply unreasonable for many Americans. This makes healthcare both unaffordable and inaccessible.

The role of pharmacy benefit managers (PBMs)

It has long been difficult to discern what is driving high prescription drug costs. This is, in part, because we don’t know what happens behind-closed-door negotiations between the middlemen pharmacy benefit managers (PBMs) and drug manufacturers.

It is understood that these parties negotiate rebates related to new therapies. They also bundle older therapies together to protect market share from emerging generic…