Employers don’t know how their prescription drug benefits are managed

The data: Nearly 2 in 5 (37%) large employers that offered health benefits in 2024 don’t know how much of the prescription drug rebates negotiated by pharmacy benefit managers (PBMs) were returned to them as savings, according to KFF’s 2024 Employer Health Benefits survey.

• 19% reported receiving “most” of the negotiated prescription drug rebate, 27% said that they receive “some,” while 16% indicated that they receive “very little” of the rebate.
• KFF surveyed 2,142 randomly selected employers across the US between January and July.

Zooming out: Rebates are payments made by drugmakers to PBMs, which are ultimately passed on to insurers and employers. Rebates are intended to reduce the actual price of prescription drugs, typically in exchange for beneficial placement on health plan formularies. But employers suspect that PBMs aren’t passing along all the rebates owed to them.

• 86% of employers are concerned about the lack of transparency in their contracts with PBMs and the rebates they receive, per a June survey by the Business Group on Health (BGH).
• 84% are concerned about the opaqueness of the pharmacy supply chain.

Why it matters: Employers are at a critical juncture where they must responsibly manage their employees’ health benefits or potentially face legal consequences.