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 Carleson, Dylan Yahn, Benjamin Light, Matt McQuideAnn Kempski, Spencer Allen, Scott TromanhauserMarilyn Bartlett, 
Steven Elkins, Matthew Bunte, and Lori Smith.

Recent Episodes

EP510: The Impact on You of Medicare Advantage Goings-on (2026 Edition), With Betsy Seals
Relentless Health ValueMay 07, 2026
510
35:3032.5 MB

EP510: The Impact on You of Medicare Advantage Goings-on (2026 Edition), With Betsy Seals

Listen on Your Favorite App I came up with at least one way to tell the difference between making a fair profit and profiteering. If someone makes more money when the patients or members they serve are worse off, yeah, call that profiteering. For a full transcript of this episode, click here . If yo...

EP509: The 7.7% Wake-Up Call: A Roadmap to Align Finance Teams With Non-complacent Benefit Design, With Patrick Nelli
Relentless Health ValueApril 30, 2026
509
37:4834.6 MB

EP509: The 7.7% Wake-Up Call: A Roadmap to Align Finance Teams With Non-complacent Benefit Design, With Patrick Nelli

Listen on Your Favorite App Sarah Monroe: Hi. This is Sarah Monroe in Chicago, and I'm a benefits procurement leader. And I'm curious why you think so few executives take proactive bold action in health benefits strategy given the magnitude of opportunity. Stacey: Isn't that a great question? For a ...

EP508: Why Don't More Self-insured CEOs Take Bold Action in Health Benefits Strategy? With Lee Lewis
Relentless Health ValueApril 23, 2026
508
44:0240.31 MB

EP508: Why Don't More Self-insured CEOs Take Bold Action in Health Benefits Strategy? With Lee Lewis

Listen on Your Favorite App This episode is the very first episode that we have done that is an AMA—an Ask Me Anything—and here is our very first question. Sarah Monroe: Hi. This is Sarah Monroe in Chicago, and I'm a benefits procurement leader. And I'm curious why you think so few executives take p...

EP507: 4 Core Concepts to Buy or Deliver the Highest-Value Healthcare—A Review
Relentless Health ValueApril 16, 2026
507
33:5831.09 MB

EP507: 4 Core Concepts to Buy or Deliver the Highest-Value Healthcare—A Review

Listen on Your Favorite App Look, we wonks, meaning you and me, you're listening to this, so I am on to you. But we wonks in the Relentless Tribe, we move like lightning on Relentless Health Value. We tend to cover lots of ground pretty fast. So, sometimes I like to, with great intention, sum up wha...

EP506: How Other Employers, Shareholders, and Clinics Are Using Price Transparency Data—And It's an Arms Race, With Jerry DiMaso
Relentless Health ValueApril 09, 2026
506
35:5132.81 MB

EP506: How Other Employers, Shareholders, and Clinics Are Using Price Transparency Data—And It's an Arms Race, With Jerry DiMaso

Listen on Your Favorite App, So, we have a few miniseries afoot here on Relentless Health Value right now, and one of them is "The Inches That Are All Around Us"—finding the hidden fees, the hidden friction for plans and members and clinics themselves a lot of times in those inches. For a full trans...

EP505: The Death of the "What Is Value" Guessing Game for Clinical and Plan Decision-Makers Ready to Move On, With Ahilan Sivaganesan, MD
Relentless Health ValueApril 02, 2026
505
44:0240.31 MB

EP505: The Death of the "What Is Value" Guessing Game for Clinical and Plan Decision-Makers Ready to Move On, With Ahilan Sivaganesan, MD

Listen On Your Favorite App Hello, Relentless Tribe. Thank you so much for showing up today. All right … to start, let me lay out the goal of the episode today. This episode is for you if you are a self-funded employer looking to ensure your members are steered and tiered to real high-value care and...

EP504: A Back-to-Basics Roadmap Through the Perverse Incentives to Advanced Primary Care, With Ryan Jacobs
Relentless Health ValueMarch 26, 2026
504
33:3630.76 MB

EP504: A Back-to-Basics Roadmap Through the Perverse Incentives to Advanced Primary Care, With Ryan Jacobs

Listen On Your Favorite App It's been a while since we started from the beginning, so let's just take stock of the basics in this show, refresh ourselves if you're a longtime listener, or welcome if you're new around here. Today we are digging on and about what I would call the poster child for prov...

Listen and Follow

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