Why Do We Need Drug Rebates, Anyway? Good Question Senator! | Pharmaguy's Insights Into Drug Industry News | Scoop.it

resSen. Lamar Alexander has a question: why do we have drug rebates, anyway?


“Why do we need rebates?” the Tennessee Republican asked a panel of pharmaceutical industry representatives at a Senate committee hearing. The Health, Education, Labor, and Pensions committee met Tuesday morning for the second of three hearings on drug pricing, and heard testimony from five interest groups representing companies that play different roles in getting medicines to patients.


Rebates are payments made by drug manufacturers to “pharmacy benefit managers,” middlemen that negotiate drug prices on behalf of companies, unions, and government agencies. PBMs come up with lists of drugs that receive preferred coverage from insurers and also arrange rebates from drug makers in exchange for favorable insurance coverage.


Sometimes the payments that drug manufacturers make to PBMs are passed on to insurers, and sometimes insurers pass on to patients the savings from those rebates. But the amount of those payments are kept secret.


Sound complicated and opaque? Alexander seems to thinks so too.


“Why don’t we just get rid of rebates and let you negotiate directly with manufactures, take that $100 billion a year, and just reduce the list price?”


Alexander turned to the drug manufacturers at the hearing, represented by Lori Reilly, executive vice president for policy, research, and membership at the trade group Pharmaceutical Research and Manufacturers of America.


“Would you like to eliminate rebates?” Alexander asked.


Find the response here…


Further Reading:

  • “Drug Ads & Coupons: Who's the Decider? The Patient, the Physician, or the FDA?”; http://bit.ly/1T68qmn
  •  “Mylan ‘Gamed the System’ and Refuses to Testify at Senate Hearing About EpiPen Costs to Medicaid”; http://sco.lt/4mtPaj