Three policy changes hit at the same time, and they’re reshaping how drug pricing works. If you’re not aware of this before your PBM renewal conversations, your clients’ proposals will look confusing.
How Policy Changes Are Forcing Lower Drug Prices
- In 2024, the American Rescue Plan Act removed the cap on Medicaid rebates. Manufacturers could suddenly owe Medicaid more in rebates than drugs cost. So they lowered prices instead.
- Then the Inflation Reduction Act started. Medicare negotiated prices on 10 drugs starting in 2026. Six of them cut their wholesale acquisition cost. Novo Nordisk just dropped Ozempic, Wegovy, and Rybelsus to $675 per month effective January 1st. Fifteen more drugs move to negotiated pricing in 2027.
- The Consolidated Appropriations Act will force PBMs to pass 100% of rebates to your plans.
When Medicare prices drop, commercial prices follow. Manufacturers know it. They’re already moving.
Humira Versus Stelara: Why Rebates Don’t Drive Decisions Anymore
Humira biosimilars came in at 20–50% discounts. Didn’t move the needle. Formulary placement still went to Humira because the rebate difference was too wide. PBMs had no reason to switch. It took over a year for the market to move.
Stelara biosimilars came in at 80% discounts. Formulary placement happened in months. The price was low enough that rebates stopped mattering.
That’s the shift. Rebate-driven decision-making is ending. Net cost is taking over.
What Rebate Credits Mean for Your PBM Renewal
Rebate credits are a specific contract clause that lets your PBM claw back against the rebate guarantees you negotiated.
Here’s what happened: manufacturers started reducing costs by 50% or more. PBMs had already established rebate guarantees based on the old pricing. They didn’t anticipate prices would drop this far. So they needed contract language to pull back on those guarantees based on what they’re actually receiving.
Most rebate credit language is intentionally vague. You’ll see language like “baseline wholesale acquisition cost minus the current wholesale acquisition cost.” That allows them to take the difference between what a drug cost before and what it costs now. The problem: there’s no specificity about which drugs trigger it, how they calculate it, or when they apply it. Every PBM interprets it differently.
By the time you see reconciliation, the PBM has already reduced your rebate check, and the contract language protects their interpretation.
It’s critical to understand exactly how they’re calculating the pullback. Ask them to show you the language. Ask them to walk through an example. If they won’t, that’s your answer.
Three Questions to Ask Your PBM Before Signing a Contract
- What rebates did we actually get last year versus what was guaranteed? Get drug-by-drug detail. Don’t accept summaries.
- How are you adjusting guarantees as drug prices drop? Make them explain their strategy. This matters for the next three years.
- Show me the math with real drugs and real numbers. See how they calculate what you actually get. Understand what can reduce it.
The pharmacy market is changing. PBMs know it. Your clients don’t. Make sure you understand what you’re actually getting before you commit to three years.
