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The Role of PBM Rebates in CGM Pricing
Pharmacy Benefit Managers negotiate rebates with CGM manufacturers that significantly impact device pricing and patient access.
The Role of PBM Rebates in CGM Pricing
The PBM Role
Pharmacy Benefit Managers (PBMs) are intermediaries that negotiate drug and device pricing between manufacturers and health plans.
Major PBMs
The CGM market is influenced by major PBMs including:
- Express Scripts
- CVS Health/Caremark
- OptumRx
- Humana Pharmacy
How Rebates Work
The Negotiation
PBMs negotiate rebates with manufacturers in exchange for:
- Preferred formulary placement
- Market share agreements
- Volume commitments
Rebate Magnitude
Rebates can be highly lucrative—sometimes up to 70% off list price.
Impact on Patients
Potential Benefits
- Lower net costs to health plans
- Potential for lower copays
Potential Drawbacks
- Lack of transparency
- Rebate savings may not reach patients
- Can favor more expensive products over lower-cost alternatives
Controversy
The lack of transparency in PBM rebate negotiations sparks ongoing debate about:
- Whether savings reach consumers
- Conflicts of interest
- Impact on innovation and competition