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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.

Go deeper

Updated 16 mins ago - Politics & Policy

Coronavirus dashboard

Illustration: Sarah Grillo/Axios

  1. Health: Ipsos poll: COVID trick-or-treat — Study: Trump campaign rallies likely led to over 700 COVID-related deaths.
  2. World: Boris Johnson announces month-long lockdown in England — Greece tightens coronavirus restrictions as Europe cases spike — Austria reimposes coronavirus lockdowns amid surge of infections.
  3. Technology: Fully at-home rapid COVID test to move forward.
  4. States: New York rolls out new testing requirements for visitors.

North Carolina police pepper-spray protesters marching to the polls

Officers in North Carolina used pepper spray on protesters and arrested eight people at a get-out-the-vote rally at Alamance County’s courthouse Saturday during the final day of early voting, the City of Graham Police Department confirmed.

Driving the news: The peaceful "I Am Change" march to the polls was organized by Rev. Greg Drumwright, from the Citadel Church in Greensboro, N.C., and included a minute's silence for George Floyd. Melanie Mitchell told the News & Observer her daughters, age 5 and 11, were among those pepper-sprayed by police soon after.

6 hours ago - Health

Boris Johnson announces month-long COVID-19 lockdown in England

Prime Minsiter Boris Johnson. Photo: NurPhoto / Getty Images

A new national lockdown will be imposed in England, Prime Minister Boris Johnson announced Saturday, as the number of COVID-19 cases in the country topped 1 million.

Details: Starting Thursday, people in England must stay at home, and bars and restaurants will close, except for takeout and deliveries. All non-essential retail will also be shuttered. Different households will be banned from mixing indoors. International travel, unless for business purposes, will be banned. The new measures will last through at least December 2.

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