Pharmacy benefit manager

Pharmacy benefit managers pass along a lot of Medicare rebates

Prescription medicine staked on top of each other
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.

How drug middlemen take back money from pharmacists

Illustration: Rebecca Zisser/Axios

Express Scripts, which manages pharmacy benefits for roughly 100 million people, claws back millions of dollars per year from pharmacies after prescriptions go out the doors, according to a contract obtained by Axios.

The big picture: Even high-quality pharmacies have to pay back some of their revenues to Express Scripts. That arrangement highlights pharmacy benefit managers' power over the supply chain and helps explain why pharmacies have intensified their acrimony toward PBMs lately.