The Rebate Trap: What’s Really Inflating Your Pharmacy Spend

How Rebates Quietly Influence Your Pharmacy Spend

If you work with a traditional PBM, these aren't isolated incidents. The methods we're about to discuss are standard operating procedures affecting your pharmaceutical spend right now.

What a Formulary Should Be

A formulary is the list of medications your plan covers. It should be built around what's best for your employees' health and your plan's financial well-being.

Unfortunately, that's not what happens.

How Pharmaceutical Companies Buy Formulary Placement

A pharmaceutical company offers a $500 rebate on their $1,000 medication. When an employee fills this prescription, they pay $1,000. That $500 rebate works through the system and lands with the PBM.

The traditional PBM keeps it.

Your employee just paid $1,000 for a medication that should have cost $500.

You're Funding an Interest-Free Loan

A rebate means your plan overpays today and maybe gets some money back nine months later. You've provided an interest-free loan to the drug company and the PBM. This is worse than overpaying on your taxes.

When Financial Incentives Drive Formulary Decisions

When a PBM collects substantial rebates from certain medications, they have a financial incentive to favor those medications on your formulary, regardless of whether they're the best choice for your employees.

The PBM advises you on formulary design. But their recommendations aren't neutral when they're receiving revenue from the pharmaceutical companies whose products they're suggesting.

The DisclosedRx Approach

As The Fiduciary and Fully Disclosed PBM®, we're contractually and ethically bound to act in your best interests:

100% Rebate Pass-Through – Every rebate flows directly to you. We don't keep a dollar.

Formulary Design Built for You – Our recommendations are based solely on your clinical goals and financial interests, not rebate revenue.

One Admin Fee – Our single administrative fee is our only revenue source from your plan. No rebates retained, no hidden revenue streams.

What This Means

When rebates don't influence formulary decisions, medications are selected based on actual value to your employees and your plan. Clinical outcomes improve. Costs decrease. Member Service becomes simpler.

The question isn't whether these practices are happening with your current PBM. If you're with a traditional PBM, they are. The question is: what are you going to do about it?

Full Disclosure means seeing every rebate, every revenue stream, every financial incentive that might influence the care your employees receive.

Your employees deserve medications chosen for their benefit, not for someone else's profit.

That's the difference a Fiduciary PBM makes.