This video is the second in a series on following the flow of rebate dollars. See Part 1 here.
Recently, because of the increased use of high deductible health plans and high-cost specialty drugs, there is growing momentum to disperse rebate dollars directly to members as a point-of-sale rebate to help the individual patient lower the cost of an individual prescription drug. The concept of point-of-sale rebates has been around for quite some time. Some programs that allow the patient to receive the point-of8/-sale rebate don’t always get the same cost offset.
Now, what about point-of-sale rebates? How about we put the rebate into the price of the prescription? If it’s a $1,000 prescription and it has a $100 rebate, why not make the prescription $900. You can do that, but the problem is that the pharmacy benefit management company (PBM) hasn’t earned the rebate money yet. They still have to pay the drug store $1,000. So if the PBM is going to collect only $900 from either the patient in the form of a copayment or coinsurance, or from the plan sponsor, or a combination of both, the PBM doesn’t have the rebate money in their hand – yet they’ve applied it and lowered the price of that prescription.
Essentially the PBM has become a bank because they have to fund the $100 rebate before they’ve actually collected it from the pharma company. Because this is done in real-time, the PBM assumes risk. To assume that risk, the PBM only funds the point-of-sale rebate at a factor. For every $100 of rebate that is potentially earned, they may only use 80% in the point-of-sale rebate because they haven’t collected the money yet – and they are not a bank. Once they do collect the rebate money, there is some backend reconciliation. Unfortunately, that reconciliation is at the plan sponsor level, not at the patient level.
Point-of-sales rebates are not a dollar-for-dollar equivalent, but it is a way to get money to the patients who perhaps can afford the drugs the least. Employers have decisions to make – should I take the traditional rebate in arrears at 100% value, or should I take a discounted value upfront to lower the cost for my members, and then have some mechanism for true-up on the backend.