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Adapted from a Pew report; Chart: Axios Visuals

As part of its plan to lower prescription drug prices, the Trump administration wants to force a major change in the way industry middlemen make their money. But that change is already happening naturally — and drug prices aren't falling.

The big picture: Pharmaceutical companies place the blame for high drug prices on pharmacy benefit managers and their complex system of rebates. The Trump administration largely agrees with that assessment, and has proposed a major overhaul that would make rebates a lot less lucrative for PBMs.

Yes, but: Rebates are already a shrinking part of PBMs' profits, and list prices of drugs aren't coming down.

  • PBMs are keeping a smaller share of rebates and passing more along to their clients.
  • Instead, PBMs are collecting more revenue through various fees — the same shift the Trump administration envisions — and through a practice called "spread pricing," according to a Pew analysis.
  • Express Scripts, one of the largest PBMs, explicitly told investors last year it would find "an alternate funding / pricing structure" to offset lost rebate dollars.

The bottom line: "One can call something a rebate, a flat fee or an elephant. It still represents a lucrative flow of money, and the influence that goes along with it,” said Robin Feldman, a UC Hastings law school professor who recently wrote a book exploring these deals.

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