Dive Brief:
- Employers are looking for a simpler pharmacy benefits model, particularly an approach that eliminates rebates to send savings directly to patients, according to a survey released last week.
- More than 90% of employers surveyed agreed a rebate-free model would improve transparency into prescription drug prices, according to the research by communications and reputation management firm Penta Group for Evernorth Health Services, which operates the Express Scripts pharmacy benefit manager.
- Additionally, 91% said an approach that removed rebates is easier to understand, and 90% reported it would improve employee satisfaction and drug affordability.
Dive Insight:
PBMs are intermediaries in the drug supply chain who manage prescription drug benefits for payers, including negotiating rebates from drugmakers, creating medication formularies and contracting with pharmacies.
The drug middlemen have faced increased scrutiny in recent years from regulators and lawmakers who argue PBMs’ opaque business practices are driving up already high medication costs. For example, critics argue the drug middlemen prefer more expensive drugs with higher rebates from manufacturers, given they often earn a portion of the rebates they negotiate.
Employers seem to prefer a model that removes rebates altogether, according to the report, which surveyed 300 employers with at least 1,000 workers.
Eight-seven percent of respondents said a rebate-free approach better aligns with their organization’s needs, while 86% said a model without rebates would improve the predictability of pharmacy spending.
“This data confirms employers want pharmacy benefits that are easier to understand, easier to budget for, and designed around the experience of the people they cover,” Ashley Holzworth-Nash, vice president of retail network product strategy and solutions at Evernorth, said in a statement.
The survey comes as the drug middlemen have faced increased political and regulatory pressure. Earlier this year, President Donald Trump signed a funding bill that included reforms like transparency requirements and a prohibition on PBMs’ linking their pay to manufacturers’ list prices in Medicare Part D.
And in 2024, the Federal Trade Commission sued the nation’s largest PBMs — UnitedHealth’s Optum Rx, CVS’ Caremark and Cigna’s Express Scripts — for allegedly steering patients toward more expensive insulin in a bid to score higher rebates.
Express Scripts reached a settlement with the FTC earlier this year, agreeing to no longer prefer drugs with high list prices on its standard formularies and delinking its compensation from savings it negotiates with drugmakers.
However, the PBM was already shifting towards some of those reforms. In October, Express Scripts announced it would transition to a rebate-free model.
Other large PBMs have also begun to shift their pharmacy benefits strategies. On Monday, Optum Rx said it would shift toward a new model where clients pay monthly fees that aren’t linked to manufacturers’ list prices or prescription volume.
