TruDataRX Insights

Your rebate is not worth as much as you think

For many employers, the prescription drug rebate check that comes in every quarter can be addictive. How many times does HR get to bring in money to the organization?

For years employers have allowed the allure of rebates to drive their pharmacy benefit strategies, but what they fail to see is just how much money they are leaving on the table. While rebates appear to be a great way to lower pharmacy benefit costs, they can actually have the opposite effect. Because drug makers use rebates as market access tools to gain customers via traditional PBM formularies, rebates can supersede clinical and other financial considerations in formulary development.

Three reasons why rebates are not always the best option to drive Rx strategies

1. It’s hard to get drug-level detail.

PBMs send your individual claims to manufacturers or GPOs to request rebates. However, when you ask for details of your rebates at the same claim level, most employers get pushback from the PBMs. Without this level of detail, you can’t know if the rebatable drug was actually worth it. (By the way, we have partners who can give you drug-level rebate detail – contact us to learn more.)

2. You’re not (always) getting the lowest net cost.

Rebatable drugs typically return a fraction of the gross cost of the drug. What if there is a similarly effective alternative that has no rebate attached but costs significantly less? Here’s a quick and easy way to think about it: Would you rather pay $100 now and get $20 back later on a drug, or pay $30 up front for a similarly effective medication?

3. Your money is worth more today than it is tomorrow.

By electing to cover rebatable drugs over their similarly effective non-rebatable alternatives, you essentially loan money interest-free to drug-makers and PBMs. Employers pay for the drugs their employees fill every week to two weeks, but the rebates earned for those filled drugs are refunded at a minimum 9 months later. You could put those deferred dollars to work for your business today.

TruDataRx is here to help you align on the best Rx strategy for your business. There are better, clinically-based options to maximize the true clinical value of your formulary, and reduce costs for the plan and your members.

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