Money From Sick People: How PBMs Use AWP, Spread, and Rebates to Inflate Drug Costs (Ep.43)
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PBMs promise big “discounts,” but what if those discounts are calculated off inflated prices? In this episode of The Benefit Whisperer, Ralph Weber interviews Antonio Ciaccia (46brooklyn Research / Three Axis Advisors) to decode the drug pricing alphabet soup, AWP, MAC, NADAC, rebates, and GPOs, and explain how incentives inside the pharmacy supply chain can drive costs up while still claiming “savings.”
Antonio shares why AWP remains the bedrock of legacy PBM contracting, how generic pricing can become a “Wild West,” and why rebates often amount to “money from sick people,” especially for members in high-deductible plans. Practical, plain-English steps for employers: understand compensation, get your full contract, and demand itemized claims data.
00:00 Unveiling the Pharmacy Benefits World
01:42 Antonio’s Journey into Drug Pricing
04:23 Understanding AWP and Its Implications
09:40 The Illusion of Discounts in Drug Pricing
13:06 The Role of PBMs in Drug Pricing
17:02 Challenges in Changing PBM Contracts
20:42 The Financial Incentives of PBMs
22:54 PBM Dysfunction in the Broader Healthcare Context
25:34 The Role of PBMs in Drug Pricing
27:57 Empowering Employers in Drug Cost Management
32:46 Decoding Drug Pricing Acronyms
36:30 The Impact of GPOs and Rebates on Drug Costs
41:44 Understanding the Burden on Patients and Employers
Ralph Weber, The Benefit Whisperer
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