• Rick Bartels, MBA

A rebate free environment? Not so fast… (90 second read)

By: Rick Bartels, MBA

There has been a lot of buzz regarding the recent prediction by Pfizer’s CEO that “rebates are going away”.

Pfizer chief executive officer Ian Read predicted the controversial rebates that drug makers pay to pharmacy benefit managers will soon disappear during a conference call on August 7th to discuss Pfizer earnings stating “I believe we are going to go to a marketplace where we don’t have rebates…” 1

Those statements were countered Steve Miller, M.D., Express Scripts' senior vice president and chief medical officer, who said at a briefing with reporters on August 9th that "it's really pretty crystal clear" that drug makers are behind soaring drug prices by controlling list prices. 2

The current rebate banter is a result of the Trump administration’s proposed elimination of safe harbor protections for pharmaceutical company rebates. 3

The healthcare system is a very large complex ecosystem which evolves very slowly. There are many forces simultaneously at play within the ecosystem. The controversy over rebates is only one of the many forces at play at this time.

We at Schooner Consulting believe rebates will be reduced but probably not eliminated, and certainly not in the near term because change in the healthcare ecosystem occurs at a snail’s pace.

If you are preparing to launch a drug anytime soon, here is an outline of what you should do now:

  • Monitor the current state of rebates for products within the therapeutic area where your drug will compete.

  • Determine the level of coverage you are looking for. (Tier-1 preferred will in all likelihood require higher rebates/discounts than tier-3 no-preferred).

  • Determine the strength of your HECON/outcomes data (Generally speaking, the more robust the outcomes data, the lower the rebate amount that will be needed to effectively compete)

  • Determine your WAC / rebate comfort zone. (Run gross-to-net calculation scenarios to determine the optimal balance of WAC price and rebates/discounts)

1. Stat News: JULY 31, 2018 Pfizer CEO predicts that controversial rebates are ‘going away’

2. FierceHealthcare: August 3, 2018, Express Scripts hits back at criticisms of PBMs, says it 'would do just fine' without drug price rebates

3. FierceHealthcare: July 19, 2018, In a blow to PBMs, Trump administration mulling overhaul to drug rebate safe harbor protections

Schooner Consulting, LLC provides managed care and market access strategy consulting. Serving small to mid-sized pharmaceutical organizations and Digital Therapeutics companies

Contact us at: 610-533-2118

#managedcare #marketaccess #pharmaceuticalindustry

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