[refurb]

If I got my grocery store and they say “buy 5 bottles of shampoo and mail your receipt for a $5 rebate” am I getting a “kick back”?

PBM rebates are not illegal. They aren’t transparent to patients (which is a problem) but they aren’t illegal.

[mattnewton]

I think this metaphor is missing a step - it would be like if you somehow bought "shampoo insurance," and under this policy the insurance company paid for your shampoo needs in exchange for a fixed monthly fee. And since people are buying under their shampoo insurance policies, then one shampoo company starts paying people directly to effectively direct the insurance companies dollars towards their brand. Isn't that a bit more like what is happening? You are being paid to influence the direction of your own policy.

I don't think this is as much as a problem with normal kickbacks since the party being directly "harmed" here is an insurance company not getting as good a deal as they could and their whole job is to set prices for policies to account for that. Of course, this could lead to a bigger problem, because insurance companies could account for programs like this in rates, and now you have an arms race where your policy only makes cost sense if you are getting these incentive payments.

[gruez]

>Of course, this could lead to a bigger problem, because insurance companies could account for programs like this in rates, and now you have an arms race where your policy only makes cost sense if you are getting these incentive payments.

Aren't the two in equilibrium though? The price of the kickback is priced into the MSRP of the drug, and the kickback you get is priced into the cost of the policy. If the kickback disappears, both would cancel out.

[mattnewton]

They are in equilibrium for people buying the product with the kickback. Other brands now are artificially more "expensive" and have to issue kickbacks to remain attractive, or the people who aren't participating just have worse rates because they might accept kickbacks in the future even if they aren't using drugs that offer them today.

My understanding is that your policy funds are effectively "mixed" with other people covered by your insurance company.

So, I think it could very easily be a net transfer of money from people who aren't using that drug category but have insurance policies used by people who do use that drug, to the drug company at the end of the day.

[Dylan16807]

If the end customer gets the money then it's not a kickback.

If a middleman gets the money it's probably a kickback.

[refurb]

That’s not how kickbacks work.

A doctor could easily tell a patient “if you go to this hospital for surgery, I’ll give you $100”

That’s still a kickback.

[Dylan16807]

Is the doctor doing that for fun?

If the doctor is getting any of the money, then that part is the kickback.

If the doctor really gets nothing extra, and the hospital gets nothing extra, then that's not a kickback, it's just weird.

[refurb]

Huh? If a company gives you a $5 rebate for buying 5 bottles of shampoo, then it gets extra sales.

So if a $5 grocery rebate a kick-back?

[Dylan16807]

Increased sales, when paid by the same entity that gets the rebate, are not a kickback.

If a doctor took money to steer you to a specific hospital, that would be a kickback.

If a hospital gives you a rebate and you're paying, that's not a kickback. But if a hospital gives you a rebate and your insurance is paying based on the non-rebated price, that's probably a kickback.

[refurb]

Precisely. PBM rebates are based on sales as well. Drug company gets more sales by making their drug “preferred” and PBM gets a rebate. It’s not a kickback.