An analyst at a hot health policy think tank in Washington is defending pharmacy benefit managers' rebate strategy.
PBMs often negotiate deals for insurers and self-insured employer plans that offer the plan a rebate, or discount, off a covered drug's list price when enrollees use the drug.
Drugmakers and many pharmacy owners want Congress to ban the PBM rebate strategy, arguing that it gives the PBMs incentive to drive the list prices of drugs up to absurd levels, and that PBMs and health insurers keep most of the rebate money.
Recommended For You
But Jackson Hammond, a senior policy analyst at Paragon Health Institute, says in a rundown of ideas for the last days of the 118th Congress that lawmakers should leave PBM rebates alone.
Casey Mulligan, a University of Chicago economist, has studied the issue and found that PBMs keep only a small percentage of the PBM rebate cash, and that collecting a percentage of the rebate gives a PBM a strong incentive to negotiate hard for the best prices for their clients, Hammond writes.
"There is evidence that eliminating rebates or delinking them from PBM revenue would ultimately increase drug costs (or, at the very least, would not lead them to be as low as they otherwise would be)," Hammond adds.
In an earlier look at Mulligan's research prepared for the American Action Forum, Hammond noted that rebates give a PBM an incentive to hold down the net costs of a plan's drugs without providing an incentive for the PBM or plan to limit patients' access to the drugs.
Banning rebates could also hurt the ability of PBMs without their own pharmacies to compete with PBMs that have their own pharmacies, Hammond wrote.
Hammond's views could have more impact than usual this week, because Paragon has strong ties to Donald Trump.
Related: Who will hold the key Trump administration benefits positions?
Many of the think tank's analysts worked in the White House during Trump's first term in office, and they could be on track to get jobs at the White House or the U.S. Department of Health and Human Services during Trump's second term.
© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
Allison Bell
Allison Bell, a senior reporter at ThinkAdvisor and BenefitsPRO, previously was an associate editor at National Underwriter Life & Health. She has a bachelor's degree in economics from Washington University in St. Louis and a master's degree in journalism from the Medill School of Journalism at Northwestern University. She can be reached through X at @Think_Allison.
