Recently we looked at the rebates a mid-size group received from their PBM. We found about 45% of their total health plan spend was for prescription drugs. Of that they were consistently getting back 12% in commission (rebate) kickbacks. In the insurance industry this is called rebating.
How does 12% in rebate commissions compare to industry averages?
According to the Congressional Budget Office (CBO) and Medicare trustees reports, the average rebate across all brand-name drugs was estimated at ~30% to 40% in recent years.
Heavily rebated classes like insulin, anticoagulants, or asthma/COPD medications can reach 60% or more. (35% of this group is diabetic).
Generic drugs usually do not have rebates, as they are already priced competitively.
Specialty drugs generally have lower rebate percentages, often <10% to 20%, though this is increasing in some categories.
Is it possible the PBM is rebating only a portion of their commissions? Naw….that can’t be true. Theirs is a 100% pass through contract, or so they say.
Sounds like plan sponsors overpay for drugs so “found” money can be distributed among deserving friends. Too bad they are not getting rebated on the rest of their health plan. Now that’s a novel idea!
