Small PBMs Urge Congress: Don’t Kill Rebates

Smaller pharmacy benefit management companies, rarely in the spotlight, are urging Congress not to fundamentally alter the way prescription drugs are paid for in the U.S.

As the Trump administration advocates banning rebates under Medicare and Medicaid, these lower-profile PBMs aim to convince lawmakers not to junk the entire system. They say Congress should start by examining business models other than just of the nation’s largest PBM players.

The assumption on the Hill is that all rebates are bad — and that’s not the case, according to the Alliance of Community Health Plans, which represents some of the smaller PBMs, including Wisconsin-based Navitus, Pharmacy Benefit Dimensions and SelectHealth as well as Geisinger Health Plan and Kaiser Permanente.

But many Congressional lawmakers aren’t aware there’s a different way to perform PBM services, Brent Eberle, chief pharmacy officer for Navitus, told Healthcare Dive.

Navitus’ model is different from the traditional PBM model. Instead of taking a percentage of rebates Navitus says it passes all of the money it receives from drug manufacturers back to clients. The company makes money by charging clients up-front administrative fees.

Indeed, Navitus’ profitability and revenue “would not be impacted at all if rebates go away,” Eberle, who testified before a House committee last week, said.

But even though the disappearance of rebates wouldn’t affect Navitus’ bottom line, the company says consumers — including its clients — would be adversely affected because their drug costs would likely increase if rebates ended, creating the opposite effect of the administration’s intended changes.

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More About BRENT EBERLE

As Senior Vice President, Chief Pharmacy Officer, Brent oversees Navitus’ health strategies division, which is responsible for clinical and population health initiatives, drug utilization review programs, formulary and rebate management, and specialty pharmacy operations.