Who drug rebates hurt: an example from the FTC's PBM case

Let’s talk about drug rebates—and who they really hurt.

(Warning: this might get uncomfortable.)

First, let’s start with an example straight out of the FTC lawsuit against major PBMs (check paragraph 69 of the full complaint: link here: https://lnkd.in/ennY8TUx)

A drug has a list price (WAC for yesterday’s readers) of $100 with a rebate of 75%. This means the actual cost to remove the drug from the pharmacy is just $25.

But here’s the kicker:
What does the mom of a sick child pay at the register?

It depends on her plan design:
• If she’s in the deductible phase, she pays $100.
• If she has an Rx copay, she pays her copay (up to $100).

In the FTC example, a $30 copay means the mom pays $5 more than it costs to take the drug from the pharmacy.

Meanwhile, the PBM sends a portion of the $75 difference back to the employer, who may—but is not required to—use the rebate to lower costs for the plan.

Let’s break this down:
An employee going through one of the hardest times in their life is overcharged for medication—so that PBMs and employers can share the savings.

Proponents argue that rebates help stabilize plans and provide much-needed rebate checks.

But let’s be candid:

What we’re really doing is overcharging our sickest employees and families for the care they need.

Rebates are a major contributor to the high cost of drugs, creating financial barriers to care for those in HDHPs or paying cash.

Drugs aren’t a special category of product.
They’re built on R&D, marketing, and sales—just like cars, phones, or computers.

It’s not impossible to have clear pricing structures.

It’s just overdue.