Let's Talk About Rebates

May 15, 2018
Express Scripts returns on average 90 percent of rebates we negotiate with drug manufacturers directly to our clients.

  Rochelle Article

Last week, the Administration released a proposal rightly aimed at lowering the high cost of prescription drugs.  We believe the Administration’s proposal builds on private-sector solutions – including those pioneered by Express Scripts -- that have worked well in the commercial market.

For over 30 years, Express Scripts has been singularly focused on helping large employers, health plans, labor unions, and public programs like Medicare expand access to needed medications without overwhelming payer budgets. In 2017, we helped save employers more than $32 billion on their prescription drug bill. Also, we held prescription drug cost increases for our clients to just 1.5%, the lowest growth rate since we started measuring trend in the early 1990s.

In recent days, we have seen a greater focus on rebate agreements between PBMs and manufacturers.Rebates were created by pharmaceutical companies in the 1990s in response to discriminatory pricing litigation. Those companies continue to sustain rebate agreements for certain brand drugs in lieu of lowering list prices. We are in favor of lower drug prices. Passing through rebates to our clients helps to lower the net cost of prescription drugs.

Rebates are not unique to Express Scripts, pharmacy benefits, or even health care. Rebates are a form of negotiated discounts. Express Scripts returns on average 90% of rebates we negotiate with drug manufacturers directly to our clients. Our clients, 100% of the time, decide how rebates will be returned to them. In turn, clients determine how they will use rebates to lower patient premiums, cost-sharing, and/or deductibles.

In any given year, more than 95% of our clients stick with Express Scripts because they know the value we bring in not only driving down costs, but also to improving care and creating better outcomes. Better value includes working with our clients to achieve a 90% generic-fill rate – and generics are not rebated.

Notwithstanding the attention on rebates, many non-rebated drugs continue to see double-digit increases.  In 2017, non-rebated drugs treating infertility, depression, high-cholesterol, and transplants all registered price increases above 15%.These cost increases shatter the myth that rebates are a key driver of higher costs.

Consider the cost of Humalog® (insulin lispro): in recent years, the list price for this medication has increased dramatically, yet the net cost has remained relatively constant. Without Express Scripts, plan sponsors would have paid exponentially more for their prescription drugs.

For example, list prices for oral oncology medications, which are not rebated or discounted to any significant extent, doubled between 2011 and 2016, from $20 per unit to $40 per unit. Looking at the 39 medications that were on the market in 2010, six had 100-200% inflation between 2010 and 2016; one had inflation greater than 300%, and one had inflation greater than 800%. The companies that make those drugs do not offer rebates, but they do continue to raise the price.

We agree with the Administration that increased choice and competition are the keys to lowering drug costs. Empowering PBMs to take a tougher stand against drug manufacturers will expand access and lower costs for tens of millions of Americans.

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