EP365: The Real Deal With PBM Contracts and Drug Rebates, With Scott Haas

The Real Deal on PBM Rebates and Drug Pricing Contracts, With Scott Haas. Why the Word "Rebate" in a PBM Contract Can Mean Whatever the PBM Wants It To. Episode 365.

Stacey Richter talks with Scott Haas, senior VP at USI Insurance Services, about the true mechanics of PBM rebates—how much of the so-called rebate a plan sponsor actually gets back, why formulary exclusions punish cheap generics, and what it takes to negotiate a PBM contract with real, absolute pricing terms.

WHAT YOU'LL LEARN

✅ Why "rebates" comprise only about 40% of the back-end dollars PBMs collect from pharma, with the rest hiding under fees like administration, data, education, or clinical program fees

✅ How the two-part rebate transaction works: pharma pays PBMs cash back for formulary access, then PBMs promise plan sponsors "100% of rebates" while redefining what counts as one

✅ Why cheap generics get excluded from formularies—they don't generate rebates, and PBMs lose money when a high-priced brand goes generic

✅ Haas's bottom-line advice: contracts need to define the actual final price in absolute dollar terms, not percentages off AWP or WAC

✅ Why plan sponsors need to understand the five things that go into getting a fair PBM price

✅ How GPOs formed by the "Big Three" PBMs aggregate and maximize rebate collection even further

WHY THIS MATTERS

As long as "rebate" can mean whatever a PBM decides it means, plan sponsors negotiating for "100% of rebates" have no real guarantee of savings—they need contracts that specify actual per-unit prices, not percentages or acronyms that can shift at any moment. Haas's plan-sponsor perspective gives employers and their advisors the specific contract language to insist on before signing.

MENTIONED IN THIS EPISODE

EP342 with Christin Deacon: Apple Podcasts | Spotify | Other Apps (link unavailable)

=== LINKS ===

🔗 Show Notes with all mentioned links: Episode Page

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00:00 Introduction.

10:29 What's the major flaw with the buyer-seller relationship between plan sponsors and PBMs?

12:04 What are the five things that need to be considered in order to get a fair price from a PBM?

13:16 Why does using average wholesale price cause problems for plan sponsors?

15:05 What does it mean to put the network risk on the PBM?

17:10 What's happening with drugs moving from specialty brand to specialty generic?

19:14 "A generic is a generic; in our world, it's binary."

23:31 "The term 100% of rebates is really irrelevant."

23:54 What does it mean to have a minimum guarantee in drug rebates?

26:39 "When you do a line-item assessment … is it producing an optimal result in comparison to competitively achieved … pricing for generics … and for specialty?"

27:52 "Plan sponsors need to grow a backbone."

29:05 Why do you need to understand your consultant's process as a plan sponsor?

29:30 Why do you need to understand formulary exclusions as a plan sponsor?

29:41 Why is it important to create a more equal PBM contract?

30:52 "Rebates inure to the benefit of the plan sponsor; they don't necessarily benefit the consumer."

31:45 What does Scott do at USI?