Health Plans Beware: Keep Contract Language Tight If Your PBM Wants Rebate Guarantees Renegotiated Because of the IRA and Biosimilars | AMCP Nexus 2025

Starting next year, 10 drugs selected by the CMS will be discounted for Medicare by about 38% off their list price because of a price negotiation program put into place by the Inflation Reduction Act (IRA). In 2027, another 15 drugs will be subject to CMS price negotiation under the IRA.

Jennifer Cruz says the downward pressure on price is having a ripple effect on the rebates that manufacturers pass on to payers that, in turn, is affecting the rebate promises that they made to health plans.

“What's going to happen is the PBMs won't be able to meet their rebate guarantees, so they're renegotiating rebate guarantees,” Cruz, a pharmacy benefit consultant for Milliman, said in an interview with Managed Healthcare Executive. “

Cruz was a panelist at a session on new developments in contracting between PBMs and health plans last week at the AMCP Nexus meeting in National Harbor, Maryland.

Health plans can expect their rebate guarantees to be reduced, with the amount depending on their usage, the size of the plan, and other factors. Rebate guarantee reductions will have a major effect on health plans because they depend on the rebates to offset their costs, Cruz observed.

But she also warned about PBMs seizing IRA price negotiation and the discounting to a “maximum fair price” for that set of 10 drugs as an opportunity to renegotiate the rebates for many more drugs. Health plans should seek contract language that is “clear, concise, and protects the plan,” said Cruz.

Biosimilars coming on the market have also affected rebates and spurred renegotiation of rebate guarantees, Cruz said.

“You had to work with your PBM on that too, but make sure your rebate language is just really clear, really tight around all those market events,” she said.