Encore! EP216: How Medicare Part D Plans Became Addicted to Drug Rebates, With Chris Sloan From Avalere Health
December 31, 2020
216
31:44

Encore! EP216: How Medicare Part D Plans Became Addicted to Drug Rebates, With Chris Sloan From Avalere Health

Alex Azar, who is the current Health and Human Services (HHS) secretary (until January 21 anyway), came out with a reboot of the proposal that effectively halts the practice of pharma manufacturers paying rebates to Part D plans. This reboot is supposed to go into effect on 1/1/2022. But this podcast is less about this may-or-may-not-actually-happen rule and is more about the actual impact of removing drug rebates within this unintuitively constructed health care system of ours.

Should rebates go away, it’s actually a big deal that fundamentally could upend the heretofore-not-transparent messy middle of drug pricing. I’ll let Chris Sloan, associate principal over at Avalere Health, explain. Spoiler alert: The impact of killing pharma rebates to plans and PBMs (pharmacy benefit managers)? Bottom line, everybody’s insurance premiums go up in the current model when rebates go away.

A few episodes from now, I’m talking with Ge Bai about why this is a suboptimal and not forgone conclusion. But this is what we’ve got going on right now. So, look for EP306 coming up for more on that.

You can learn more at avalere.com.  

Chris Sloan, associate principal at Avalere, advises a number of clients—including pharmaceutical manufacturers, health plans, providers, and patient groups—on key policy issues facing the health care industry. Chris’s economic analyses of key policy proposals and issues, including drug pricing and the repeal and replace efforts around the Affordable Care Act, have been featured in a wide range of publications, including the Wall Street Journal, the New York Times, the Washington Post, Politico, Axios, and Vox.


02:35 “Rebates are a really big part of Medicare Part D.”
02:49 What the “follow the dollar” looks like in this scenario.
04:14 How rebates between PBMs and manufacturers work, and how list prices play into this.
05:31 How this system can hurt the patient, and how this new proposal works to change that.
06:42 Pricing a product as a PBM.
08:06 The total dollar value of PBM rebates.
10:50 Do we know how much PBMs are making in incentives?
13:29 Are PBMs helping or hurting the process?
16:18 Why pharmaceutical manufacturers may be more compelled to raise their prices thanks to large PBMs.
17:13 Perverse incentives in the system.
17:57 “At the end of the day, PBMs are still going to be employed by health plans.”
18:56 How a new model is combating the perverse incentive that raises prices for patients.
22:11 The trade-off involving premium prices in this new proposal.
24:38 “We’re not talking astoundingly large amounts of money.”
25:12 Why PBMs and health plans are against this proposal.
26:02 Why Pharma is for this.
26:51 The perverse incentives for health plans.
28:39 The benefit of Part D.
29:25 The advantage of huge rebates.

You can learn more at avalere.com.  

pharma,pbm,healthtech,drug rebates,medicare,avalere,healthcare prices,
|

Episode Support Provided By

Special Thanks to Our 2026 Sustaining Monthly Donors

Kimberly CarlesonDylan YahnBenjamin LightMatt McQuideAnn KempskiSpencer AllenScott TromanhauserMarilyn BartlettSteven ElkinsMatthew Bunte.

Recent Episodes

EP502: How Some Pretty Wild Medicare Fraud Sabotages ACOs and Also Independent Practices and Could Cost Plan Sponsors Such as Self-insured Employers a Lot of Zeros Downstream, With Brian Machut
Relentless Health ValueMarch 05, 2026
502
38:5835.67 MB

EP502: How Some Pretty Wild Medicare Fraud Sabotages ACOs and Also Independent Practices and Could Cost Plan Sponsors Such as Self-insured Employers a Lot of Zeros Downstream, With Brian Machut

You know, I always kind of wondered what the hackers were doing with all of the medical data that they've managed to get their mitts on over the past, I don't know, however many years. Now, I know at least one thing. If you're a hacker, you can use your stolen medical data to not actually send wildl...

EP501: Speaking of Infusions, Do You Want to Pay $135 or Do You Want to Pay $13,560 for the Exact Same Drug? With Ivana Krajcinovic, PhD
Relentless Health ValueFebruary 26, 2026
501
39:5736.57 MB

EP501: Speaking of Infusions, Do You Want to Pay $135 or Do You Want to Pay $13,560 for the Exact Same Drug? With Ivana Krajcinovic, PhD

Let us chat about today the inches all around us and also about how there is no market in healthcare all at once in this show. Today I am talking with Ivana Krajcinovic. And let me give you some examples of the inches. Two members of a plan get infusions at a hospital. And if these two members had g...

Take Two: EP398: Why Are Commercial Carrier Marketplaces Completely Boring? Maybe Because There Isn't a Marketplace, With Jacob Asher, MD
Relentless Health ValueFebruary 19, 202634:5231.91 MB

Take Two: EP398: Why Are Commercial Carrier Marketplaces Completely Boring? Maybe Because There Isn't a Marketplace, With Jacob Asher, MD

We have been doing a little series called "The Inches Are All Around Us," digging out waste in the $5.6 trillion healthcare sector where half an inch of waste can equal billions of dollars. I'm going to right now introduce another series that is complementary but has a slightly different focus. And ...

EP500: This Is Episode 500, and It's All About You, Tribe
Relentless Health ValueFebruary 12, 2026
500
38:2135.11 MB

EP500: This Is Episode 500, and It's All About You, Tribe

Listen On Your Favorite App This episode would not be happening, to be frank, if Cora Opsahl hadn't asked me what my plans were for episode 500. A few weeks ago, we were in the lobby bar at the legendary Hotel Chelsea—Sid Vicious, Patti Smith, you know the place. In our defense, the Hotel Chelsea is...

EP499: Self-insured Employers and Other Plan Sponsors Are Paying Millions for MSK (Musculoskeletal) Injuries That Would Have Healed Themselves, With Jay Kimmel, MD
Relentless Health ValueFebruary 05, 2026
499
28:0425.7 MB

EP499: Self-insured Employers and Other Plan Sponsors Are Paying Millions for MSK (Musculoskeletal) Injuries That Would Have Healed Themselves, With Jay Kimmel, MD

Hello, all you and the Relentless Health Tribe trying to figure out how to do right by patients and the folks footing the bill. Welcome to it. This is episode 499, one episode before episode 500. So, come back next week for that one. Listen on Your Favorite App All right, so today, let's talk about ...

EP498: The Payment Integrity Arms Race—RCM (Revenue Cycle Management) and Plan Sponsors, With Mark Noel
Relentless Health ValueJanuary 29, 2026
498
34:3531.65 MB

EP498: The Payment Integrity Arms Race—RCM (Revenue Cycle Management) and Plan Sponsors, With Mark Noel

Listen On Your Favorite App This episode is part of the "Inches Are All Around Us" series because … yeah, you'll see why fast enough. So, last week or two weeks ago, if you listened to that episode about clearinghouses with Zack Kanter ( EP497 ), you may or may not recall. And if you didn't listen t...

Take Two: EP341: The "Just Spend Everything You're Given" Trap—Lessons in True Provider Fiscal Discipline, With Gary Campbell
Relentless Health ValueJanuary 22, 202636:5633.8 MB

Take Two: EP341: The "Just Spend Everything You're Given" Trap—Lessons in True Provider Fiscal Discipline, With Gary Campbell

Listen On Your Favorite App This episode is part of the "Inches Are All Around Us" series looking for all the little pockets—inches, if you will—that comprise the greater than $1 trillion in healthcare waste in this country annually. For a full transcript of this episode, click here . If you enjoy t...

Listen and Follow

Sponsored by Aventria Health Group
©2026 BD Bridges LLC. All Rights Reserved.