The Reality of Rebates
Express Scripts exists to lower the cost of medications. We work with drug manufacturers to do just that – whether through lower list prices or rebates
Rebates are just one tool to lower drug costs – in direct response to skyrocketing prices set by big pharmaceutical companies.
Express Scripts negotiates with drug companies to lower the cost of medications included on our clients’ formularies. As part of the negotiation process, pharmaceutical companies offer rebates for some brand-name medications. When a consumer fills a prescription for a medication that offers a rebate, the drug manufacturer pays the rebate, which is shared with our clients based on the terms of our contracts. Clients decide how they want to use the savings and may elect for a very small percentage of rebates to be retained by the PBM.
Drug makers, not rebates, raise prices
PBMs help get the lowest net cost for their clients and consumers. Claims that “higher rebates mean higher prices” have been repeatedly debunked and repeatedly disproven.
The U.S. House of Representatives Committee on Government Oversight and Reform found that:
Drug manufacturer claims that rebates increase drug prices were not supported by their own evidence.
The Medicare Payment Advisory Commission research in the Part D program indicates that:
Prices for brand name prescription drugs have far outpaced rebates — with net prices more than doubling between 2010 and 2020.
The Congressional Budget Office found that:
Limiting the use of rebates would increase federal spending in Medicare and Medicaid by $177 billion from 2020 to 2029 — costing taxpayers — due to premium increase driven by higher drug prices.
A 2019 U.S. Government Accountability Office study found that:
99.6% of prescription drug rebates in Medicare Part D are passed through to plan sponsors and used to lower costs for Medicare beneficiaries. These savings have contributed to reductions in Part D basic premiums, from $34.70 in 2017 to a projected $31.50 in 2023.
If the claim that “rebates increase drug costs” was true, the cost of non-rebated drugs would increase by very little each year.
But that’s not the case.
For example, prices of prescription drugs without rebates rose by double digits from 2017 to 2022.
How Rebates Work
Rebates help defray ever-rising drug costs for Express Scripts clients and consumers
Rebates are not secret or hidden payments. Our clients understand the rebates we secure and have the choice to determine how these cost savings are used. More specifically, clients receive detailed financial disclosures, which include rebate arrangements with pharmaceutical manufacturers, as well as administrative fees for services provided. Further, all Express Scripts clients have an annual right to audit our performance and adherence to contract terms using an independent third-party auditor.
Clients may elect to utilize a rebate sharing arrangement to offset or forgo the cost of administrative services that Express Scripts provides.
Most Express Scripts clients elect to have nearly all of the rebate dollars passed to them. Without the ability to deliver rebates, health care costs would be much higher. Here’s a closer look at how clients choose to use rebate value.
Lower premiums and cost-sharing
Expanded medication lists
Fund wellness programs
Pass rebates directly to patients at the pharmacy counter
Express Scripts offers multiple economic models, including fully transparent options to provide clear and predictable costs for prescription drug benefits. Our ClearCareRx offering is one such model for clients covering more than 10,000 lives.
100%
Rebate pass through that Express Scripts receives
$
Clients pay exactly what Express Scripts pays pharmacies for a prescription
1
Simple fee to cover the administration of pharmacy benefits, PBM product services, reporting and analytics – 100% auditable
+
Clinical & Financial Performance Guarantees, including improvements in drug performance, adherence and overall patient outcomes
Read more about how medications are priced