Photo: Saul Loeb/AFP/Getty Images

CVS Health CEO Larry Merlo used his company’s second-quarter earnings call yesterday to shine some light on rebates, one of the most secretive components of the drug supply chain.

The big picture: Rebates are an important part of the drug pricing debate, and PBMs use them to their advantage. But the political focus on rebates also deflects attention away from pharmaceutical manufacturers — the companies that ultimately still dictate the high list prices of prescription drugs.

Merlo said CVS will keep $300 million worth of drug rebates from pharmaceutical companies this year, which equates to about 3% of its earnings.

  • That is well below what Wall Street had assumed. Ann Hynes of Mizuho Securities USA, for example, estimated CVS’ drug rebates were closer to 14% of earnings.

Yes, but: "Rebate" can be an imprecise term. As we’ve previously reported, lawyers for big PBMs carefully define what constitutes a "rebate," and that definition often does not benefit PBMs' clients.

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Trump's new TikTok threat

Photo illustration: Aïda Amer/Axios. Photo: Jim Watson/AFP via Getty Images

President Trump said twice Monday that the U.S. Treasury would need to get a portion of the sale price of TikTok, as a condition of regulatory approval.

Why it matters: This is akin to extortion — the sort of thing you'd expect to hear on a wiretap, not from the White House in front of reporters.

Ford names James Farley as new CEO amid ongoing turnaround effort

James Hackett, left, is retiring as Ford CEO. Jim Farley, right, takes over Oct. 1. Photo: Ford

Ford announced Tuesday that James Farley will take over as its next CEO, replacing James Hackett, 65, who is retiring after three years in the job.

Why it matters: It leaves Farley to complete the company's ongoing turnaround effort. The transition will be that much harder as the industry tries to navigate the coronavirus-induced economic slowdown which shuttered Ford plants for two months on the eve of some of its most important vehicle launches.

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Watch the full "Axios on HBO" interview with President Trump

In this episode of “Axios on HBO”, President Trump discusses his handling of the coronavirus pandemic, the upcoming election and much more with National Political Correspondent Jonathan Swan.

The interview was filmed on Tuesday, July 28 and aired Monday, Aug. 3 on HBO.