Let the Pharmacy Rebates Go Directly to Medicare Beneficiaries

More transparency would create a system that helps patients and benefits all stakeholders.

Medicare beneficiaries who most need the rebates that result from PBM and health plan negotiations with pharmaceutical companies are not benefiting. Part of the reason is that PBMs and insurance companies do not now disclose the rebate amounts, argues Justin McCarthy, a senior vice president at Pfizer.

“The problem is the system is not transparent such that patients who are taking the medicines for which rebates have been negotiated are not aware of the rebate and do not appear to be benefitting directly from them either,” writes McCarthy in the Hill. “The effect of this market distortion is that the patients who should be benefiting from these negotiated discounts are subsidizing the premiums for everyone else in the Part D program.”

If the rebates go directly to Medicare beneficiaries, they would save $270 a year on Pfizer medicine, McCarthy writes, and some patients taking Pfizer medications could save more than twice that amount.  

McCarthy also argues that such a move would make the system “simpler and more transparent. Everyone—especially the patient—will be able to see what the discounts are at the pharmacy counter. That means we fully expect that insurance plans and PBMs will be able to negotiate even greater discounts above the level of our current rebates.”