PBM Reform Debate: Panelists Clash Over Spread Pricing and Rebates | AMCP Nexus 2025

What started out as a session on federal reform of pharmacy benefit managers (PBMs) became a debate among panelists about spread pricing and rebates tat the inaugural pharmacy policy summit of the Academy of Managed Care Pharmacy (AMCP).

The policy summit is being held the day before AMCP’s traditional fall meeting, called AMCP Nexus, which starts Tuesday. The policy summit and the AMCP Nexus are being held at the Gaylord National Resort and Convention Center in National Harbor, Maryland, outside of Washington.

There is broad consensus in Congress about the need for PBM reform, but disagreements about what that should look like at the federal level, said Sujith Ramachandran, Ph.D., associate professor at the University of Mississippi School of Pharmacy.

“There are multiple players in the prescription drug ecosystem that have complex incentives that are keeping the price of the drug high,” he said. “I don’t think it is any one player in this collective system that has landed here.”

But even the panelists couldn’t agree on what the issues were or how to bring down costs for patients without causing healthcare costs and premiums to rise for employers and patients.

On Spread Pricing

Michael Baxter, M.A., vice president, government affairs at the American Pharmacists Association (APhA), made a case for PBM reform from the perspective of pharmacies. “All the PBM contracts that our members have shown us for the last year were underwater on brands from 4% to 10%,” he stated.

The APhA is an advocacy organization that represents pharmacists and supports eliminating spread pricing. Baxter argued spread pricing can create an ethical dilemma: “Is it ethical to reimburse a pharmacy less than what they paid to get the drugs from their wholesaler? If the answer to that is no, then we need some PBM reform.”

Angela Banks, M.A., MBA, vice president of policy at the Pharmaceutical Care Management Association (PCMA), took exception to spread pricing being characterized as PBMs charging a plan more for a drug than what they’re paying the pharmacy.

She said spread pricing is a risk mitigation strategy that allows employers to predict costs consistently while PBMs absorb fluctuations in pharmacy pricing across different locations. PBMs take on not just upside risk, but also downside risk.

“Pharmacies buy and sell at different rates. What spread does is allow for shifting the risk from the plan sponsor, the employer, the labor union, and the government entity over to the PBM,” Banks said. “No matter where a patient acquires a specific drug, for that particular drug, the plan sponsor will pay the same amount. The employers who choose spread pricing are typically those that can’t sustain those fluctuations. And sometimes the PBM is making more on the claim, and sometimes they’re losing.”

Ramachandran pointed out that PBMs have been happy to take on that risk for the spread because it has in some cases resulted in large profits. He pointed to the Federal Trade Commission reports published last year. “Based on their investigation, they found, for example, that for two brand-name cancer drugs, the big 3 PBMs generated about $1.6 billion in spread margin over just three years. That’s on just two drugs. So, let’s imagine how many more brand-name, high-cost firms are out there in the market.

“In its second report, the FTC found that on 51 different specialty medications, PBMs generated over $7.5 billion roughly in spread margin. And again, these are large dollars that are preferable for PBMs, because there is when they take on that risk of variability,” Ramachandran said.

Banks called these data “cherry-picked,” and that “makes it much harder to understand the big picture. What we’re talking about is over 20,000 different drugs, not one or two,” she said.

Ramachandran called for more transparency and the ability of the pharmacy or the payer to be able to audit the spread gains but said the spread pricing option should continue to be available for smaller employers that might want that contracting option. “It is difficult for a payer to know exactly what that spread amount is and how much of it is actually being passed on to the payer or to the patient at the point of sale. So that makes it very ripe for abuse.”

Banks also took exception to the spread pricing option, which could be abused. “I don't think that any of the contracting models that employers have to choose from are abusive. These are sophisticated healthcare purchasers, and they have many, many options in the marketplace. If they felt like any one of those was not what they were looking for or did not meet their needs, they simply switched. They do it every day. It's a highly competitive market.”

On Rebates

During the session, Ramachandran also pointed out that the debate about rebates has existed for some time, with concerns about whether rebate dollars go to the patient or to the payer. This, he said, set off because of a series of investigations conducted at Medicaid at the state level and by the Federal Trade Commission.

“In 2024, there were about $350 billion worth of rebates being paid from the list price down to the net price, and that number has been increasing every single year for the past several years,” he said. “That increase has slowed down, and it is growing slower than it used to.”

He pointed out that the PBMs have an evolving business model that is changing where the rebate dollars go, where the PBM revenue comes from, and how much goes to the PBMs' own rebate aggregators. There is a question, he said, about “how much of that is actually being transparently seen by the payer, and then the patient at the point of sale becomes questioned. This is why I think we need to begin with transparency when we talk about PBM reform and rebates specifically. Employers and payers need transparency to ensure they are choosing somebody whose incentives are aligned.”

But Banks said that plan sponsors — employers, unions, and government entities — already have choices, with every major PBM offering 100% rebate pass-through options. She warned that forcing point-of-sale rebates could dramatically increase premiums. “Somebody is paying for these things one way or another. We can squeeze the balloon on one end, and it will get bigger on the other. If you do point-of-sale rebates, it results in higher premiums.

She cited an analysis from 2018 from the Congressional Budget Office that found point-of-sale rebates in Medicare Part D would cost $43 billion. A separate analysis from 2023 from Milliman indicates that value for an individual, as defined by the Milliman Medical Index, would decrease by 6% if such rebates were passed through to employees.

Banks said PBMs have been offering 100% pass-through rebates for some time.

“The PBM floats the money,” she said. “When we think about what the time value of money is and the fact that the PBM is having to float this for many, many months, it could start to get more costly over time if all of the PBMs are floating all of the rebate dollars at the point of when they occur at the point of sale and then needing to wait for pharma to reimburse.”

But Baxter expressed skepticism about the implementation of 100% pass-through to patients at the point of sale, noting the complexity of retrospective rebate calculations.