Aug 15, 2019

Pharmacy benefit managers pass along a lot of Medicare rebates

Photo: Paul Linse/Getty Images

Pharmacy benefit managers negotiated $18 billion worth of rebates from drug manufacturers within Medicare’s prescription drug program in 2016, and they retained less than 1% of those rebates for themselves, according to a new Government Accountability Office report.

The big picture: This isn’t surprising, as Medicare is structured so that PBMs pass pretty much all rebates back to the federal government. While the GAO report offers a good base of how middlemen affect drug prices in Medicare, it does not fully address larger issues.

These include: 

  • PBMs do keep rebates in commercial plans. Those commercial rebates are most important and highly variable, and they're are hidden within a black box, which Bloomberg started to expose in 2016.
  • PBMs extract payments from drug companies that are not technically rebates — things like inflation payments, prompt payment discounts and many more — but they act a lot like rebates. The GAO only made a passing reference to “bona fide service fees.” 
  • The GAO acknowledges the contracts it reviewed “are not generalizable to all service agreements that are in effect,” and many agreements omitted important information because PBMs or health insurers viewed it as proprietary.

Go deeper: How Express Scripts claws back money from almost all pharmacies in Medicare

Go deeper

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Why it matters: The results of the study, which claimed to have analyzed data from nearly 96,000 patients on six continents, led several governments to ban the use of the anti-malarial drug for coronavirus patients due to safety concerns.

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All four former Minneapolis police officers have been charged for George Floyd’s death and are in custody, including Thomas Lane, J. Alexander Kueng and Tou Thao, who were charged with aiding and abetting second-degree murder and aiding and abetting second-degree manslaughter.

The latest: A judge Thursday set bail at $750,000 for each of three ex-officers, AP reports.

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John Kelly in the White House in July 2017. Photo: Cheriss May/NurPhoto via Getty Images

Former White House chief of staff John Kelly defended James Mattis on Thursday after President Trump attacked the former defense secretary as "the world's most overrated general" and claimed on Twitter that he was fired.

What he's saying: “The president did not fire him. He did not ask for his resignation,” Kelly told the Washington Post in an interview. “The president has clearly forgotten how it actually happened or is confused."