Many of the top rebated drugs have generic alternatives, offering insights into cost-reduction strategies
Center for Improving Value in Health Care (CIVHC) recently released data on the top 15 prescription drugs health insurance payers receive rebates for through the updated Prescription Drug Rebate Analysis. The analysis shows that prescription drug costs for payers and patients continues to rise, in spite of rebates intended to provide financial relief. Nine of the eleven drugs that appear on the top 15 list for both highest volume and highest total rebate amount have generic alternatives, which suggests that rebates could be driving increased use of higher cost brand and specialty drugs.
Commercial health insurance payers submit rebate data to CIVHC every year, but only recently began submitting data on the specific drugs they receive rebates for. Only two out of the eleven drugs that appear in both the highest volume and rebate amount lists – Jardiance and Ozempic –have no generic alternatives.
Kristin Paulson, JD, MPH CEO and President
“The state of Colorado continues to put a lot of effort into decreasing prescription drug costs for Coloradans,” said Kristin Paulson, CIVHC President and CEO. “We’re one of only a few states in the nation that are collecting information on drug rebates, which is helping us understand how rebate dollars could be used to lower costs for everyone. This latest information identifying which drugs are being rebated the most provides additional support by increasing transparency around drug spending and cost drivers.”
Drug manufacturers provide drug rebates to Pharmacy Benefit Managers (PBMs) as incentives for putting their drugs on a payer’s preferred drug list. These rebates, when passed through by PBMs, can provide health insurers with some relief from high drug costs, although some argue they may also be contributing to overall increases in prices by increasing use of brand and specialty drugs when lower cost alternatives may exist.
According to CIVHC’s Community Dashboard, prescription drug costs for health insurers and patients continues to be an affordability concern with combined drug costs increasing 151% from 2013-2022. Understanding the impact of drug rebates on total drug spending and which drugs payers receive the most rebates for is important to help address these rising costs.
In January of 2024, Colorado legislation began requiring commercial payers to use rebates to reduce health care costs for employers and members. Commercial insurers that administer self-insured employer health plans are exempt from compliance unless the employer specifically requests adherence to the bill's policies.
Based on this most recently released drug rebate data, across all payers, drug rebates rose 30% while total prescription drug spending rose 24% after subtracting drug rebates received by payers. This suggests that drug rebates alone are not sufficient to address rising drug costs.
