Pharma Rebates: A Few Nuances You May Not Have Thought Of, With Ann Lewandowski—Summer Shorts

So much can be said about pharma rebates or, as I’m starting to call them after speaking with my guest today, Ann Lewandowski, monies received back from manufacturers or even post-sale concessions. And we get a little bit into this today why rebates is just so much linguistic gymnastics that I am over the word. For a full transcript of this episode, click here. If you enjoy this podcast, be sure to subscribe to the free weekly newsletter to be a member of the Relentless Tribe. I mean, some of these monies received from manufacturers are labeled rebates, but not all the money that comes from manufacturers is usually called a rebate. Some of these dollars, for sure, wind up in the pockets of the PBM/GPO (pharmacy benefit manager/group purchasing organization) or even in the pocket of the TPA (third-party administrator)—allegedly, I guess, if I’m thinking about that whistleblower case where $27 million of somebody else’s rebates is alleged to have wound up in the EBC/TPA (employee benefit consultant) executive bonus pool. Listen to that pod with Ann Lewandowski (EP476) from earlier if you are not familiar. But regardless, much has already been said about these whatever we’re calling former rebates on Relentless Health Value in the past: the shows with Scott Haas (EP365); Mark Cuban (EP418); Chris Sloan (EP216); Pramod John, PhD (EP353); Paul Holmes (EP397), amongst others. I say all this to say that this show today is not some kind of Vulcan mind meld, wherein all the insight there is on this vast topic gets compacted into your 20-minute drive home or whatever it is you happen to be doing right now. Alternatively, this show is gonna summarize what’s happening and being written right now about these whatever “pharma rebates” that has caught my eye. First up, an article by Austin Chelko. But here is a paragraph from that article by Austin Chelko: “Despite per employee rebates paid to employers increasing almost threefold since 2017, our benchmarking data reveals total drug costs have still risen by close to 24% over that same time. [So threefold increase in rebates back, but drug costs still are going up 24%.] “Health plans continue chasing rebates simply because they are presented as savings and dangled like a golden carrot. However, it does not address the cost problem as everyone would like. There are multiple long-term implications to this approach [ie, the rebate approach]. Here are just a few: Rebate-driven contracts block employers from pursuing lower-cost generics, biosimilars, and therapeutic alternatives. Rebates incentivize PBMs to support clinically immaterial patent extensions and shifts the priority from comparative effectiveness. Under most contracts, PBMs can hit any guarantee they set for a particular employer.” Listen to the show with Chris Crawford (EP465) all about that. “This happens by making formulary changes, cross subsidizing drug channel guarantees, MAC [maximum allowable cost] manipulation, changing drug tiers, etc.” Right? So, the stuff Austin mentions are, for sure, issues. And here’s another one, and this is the one Ann Lewandowski discusses in the Summer Short that follows. Rebate deals often shove genetic testing off the bus—no genetic testing to determine if a drug will work or maybe even is harmful for the member or patient. You can’t genetic test and then make coverage decisions based on that genetic test if you want to keep the rebate. So, choose between knowing a drug will work because there’s a genetic test available to determine this, in some cases, or option two, getting the rebate off the often-crazy high list price. And this is really a “rock and a hard place” choice. Ann Lewandowski, relative to genetic testing, cites a study in the conversation that follows about just how pharmacogenetic testing can reduce emergency room department visits for medication interactions. Also, now I’m thinking about the show with Pramod John. There were two earlier Relentless Health Value episodes with him (EP352 and EP353) that get into this exact same genetic testing insight in some detail. It’s becoming really inarguable that some drugs are just not gonna work for some people, and seriously, we want somebody running around who needs a blood thinner taking one that is not working? But then if you try to roll out the genetic testing, you don’t get the rebate, right? Now, you do have to watch some of these testing companies, though. I had a bit of a personal run-in with one of them. Certainly, call me if interested. Okay, one last really pretty key talking point before we kick in to this Summer Short (and yet don’t kill the messenger); but it would be disingenuous not to point out the service that rebates provide to some plan sponsors who are so inclined. Here is a post by Peter Hayes. Peter wrote, “What often gets overlooked in discussions is the net impact of certain behind-the-scenes financial transactions. In this case, the rebates are directed to the plan sponsor, who uses them to lower premium costs for everyone. However, this benefit comes at the expense of patients using medications and paying the full price for them. “This situation effectively creates a regressive tax on sicker patients: Healthier members benefit from reduced premiums, while those who need critical medications end up paying more. Unfortunately, about 50% of Americans are not taking essential medications due to affordability issues, which ultimately leads to higher costs for everyone in the long run.” To this end, Peter Hayes cites an Adam Fein post referencing new data from Milliman. Adam Fein wrote about that. He wrote, “As [this Milliman] report explains: ‘In most employer-sponsored PPO plans, rebates do not affect an employee’s [out-of-pocket] costs but could reduce employee contributions to their premiums.’” The full report from Milliman can be found here. So, all of this is certainly food for thought as we think through actions and reactions and downstream impact. Today, as aforementioned, I am speaking with Ann Lewandowski. Ann Lewandowski is a nationally recognized award-winning healthcare executive. Most listeners probably know her last name, at the very least, from the Lewandowski v. Johnson and Johnson case that came out last year. Also, as aforementioned, I had interviewed Ann earlier (EP476) about the pharma rebate whistleblower case. Also mentioned in this episode are Scott Haas; Mark Cuban; Chris Sloan; Pramod John, PhD; Paul Holmes; Austin Chelko; Chris Crawford; Peter Hayes; Adam Fein; and Nina Lathia, RPh, MSc, PhD.   You can learn more at patientvalueinsights.com and by emailing ann@patientvalueinsights.com. You can also follow Ann on LinkedIn.   Ann Lewandowski is a nationally recognized healthcare executive and trusted advisor to health plan sponsors, known for helping employers strike the balance between cost control and benefit quality. With deep experience in health policy, compliance, and benefit design, Ann empowers plan sponsors to adopt a participant-first mindset—ensuring health benefits work for employees while protecting the organization’s fiduciary and financial responsibilities. Ann’s dual perspective as a healthcare administration professional and a patient sets her apart. This gives her unmatched insight into the real-world challenges employees face when navigating care while addressing the economic pressures plan sponsors face in a volatile healthcare market. Her experience in health plans, providers, and the pharmaceutical industry gives her unrivaled insights into the complex purchasing environment healthcare purchasers face. Ann’s approach leads to measurable outcomes: cost savings, stronger compliance, more competitive benefits, and better employee satisfaction and retention. Her work has been recognized with numerous national awards, including honors from HRSA (Health Resources and Services Administration), the Pharmacy Society of Wisconsin, and the Healthcare Advocate Summit. In 2024, she was named a MarketWatch Top 50 Maven for her leadership in pharmacy policy and pricing reform. She recently completed a Master of Legal Studies at Arizona State University, with dual emphasis in Health Law and Healthcare Compliance.   07:24 What is a pharmaceutical rebate? 08:15 Why are pharma rebates so opaque? 09:52 Texas lawsuit on insulin pricing. 10:18 Why is focusing on a singular type of concession difficult with current pharma rebate structures? 10:50 EP397 with Paul Holmes. 13:55 EP353 with Pramod John, PhD. 14:29 How does pharma genomics testing affect pharma rebates? 14:52 EP465 with Chris Crawford. 15:52 EP426 with Nina Lathia, RPh, MSc, PhD.   You can learn more at patientvalueinsights.com and by emailing ann@patientvalueinsights.com. You can also follow Ann on LinkedIn.   Ann Lewandowski discusses #pharmarebates in #healthcare on our #healthcarepodcast. #podcast #digitalhealth #healthcareleadership #healthcaretransformation #healthcareinnovation   Recent past interviews: Click a guest’s name for their latest RHV episode! Andreas Mang and Jon Camire (EP479), Justin Leader (Take Two: EP433), Andreas Mang and Jon Camire (EP478), Stacey Richter (EP477), Charles Green (Bonus Episode), Ann Lewandowski, Peter Hayes, Yashaswini Singh, Dr Kenny Cole, Dr Eric Bricker, Dr Christine Hale