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The drug rebate curtain

An illustration of a prescription pill fading.
Illustration: Sarah Grillo / Axios

One of the primary functions of a pharmacy benefit manager is to negotiate rebates from the list prices of prescription drugs. In return for the rebates, PBMs agree to cover those medications and make it easier for people to access them. PBMs then pass along the savings to the employers and health plans that hire them, often keeping a cut for themselves.

Yes, but: It's not that simple. As the Express Scripts template contract and new documents show, a PBM can carve out and keep entire portions of fees that look like rebates but aren't technically rebates. It also can play other rebate games that could cost unwitting employers a lot of money.