WASHINGTON — Sen. Lamar Alexander has a question: why do we have drug rebates, anyway?
“Why do we need rebates?” the Tennessee Republican asked a panel of pharmaceutical industry representatives at a Senate committee hearing. The Health, Education, Labor, and Pensions committee met Tuesday morning for the second of three hearings on drug pricing, and heard testimony from five interest groups representing companies that play different roles in getting medicines to patients.
Rebates are payments made by drug manufacturers to “pharmacy benefit managers,” middlemen that negotiate drug prices on behalf of companies, unions, and government agencies. PBMs come up with lists of drugs that receive preferred coverage from insurers and also arrange rebates from drug makers in exchange for favorable insurance coverage.
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