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Trends of Prescription Drug Manufacturer Rebates in Commercial Health Insurance Plans, 2015-2019

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Ge Bai, PhD, CPA, is a Professor of Accounting at the Johns Hopkins Carey Business School and Professor of Health Policy & Management at the Johns Hopkins Bloomberg School of Public Health. In 2022, she became a Visiting Scholar at the Congressional Budget Office.

Prescription drug manufacturers routinely offer postsale rebates to pharmacy benefit managers (PBMs) and health insurance plans.1 While drug rebates can reduce plans’ net costs, rebates do not reduce patients’ cost sharing, which is usually based on prerebate list prices set by drug companies.1,2 Drug rebates can incentivize drug manufacturers to inflate list prices and PBMs to distort drug formularies to favor high list price and high rebate therapies.13 These issues are the focus of recent policy proposals by the US Department of Health and Human Services, as well as federal legislative initiatives.4

Recent studies have estimated overall price concessions for prescription drugs by using drug manufacturers’ financial disclosures.2,3,5 However, estimated overall price concessions also include coupons, discounts, and other nonrebate items that do not necessarily affect PBMs’ incentives, and it remains unknown what insurance plan characteristics are associated with drug rebates. In this economic evaluation, we examined the magnitude and trend of prescription drug rebates in commercial markets from 2015 to 2019 and identified insurance plan factors associated with rebates.

The full report can be found in JAMA Health Forum.

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