Navigating the Physician-Administered Drug-Rebating Landscape

Physician-administered drugs have the highest rates of 340B utilization, with many brand drugs experiencing 40 to 50 percent of sales at the 340B price. This creates a significant risk of duplicate Medicaid rebates which has been a focus of many pharmaceutical manufacturers. Over the last five years, commercially contracted rebates for physician-administered drugs have been on the rise, creating additional financial risks for manufacturers. Growth in the prevalence of these rebates has been driven primarily by two factors:

• Growing competition from biosimilars in disease states historically dominated by a single biologic
• Payors increasing their buyer power through consolidation, pressuring manufacturers for discounts via pharmacy benefit managers, and group purchasing organizations

To effectively address these challenges, manufacturers need the contractual right to withhold rebates on 340B utilization, sufficient data to identify ineligible rebates, and realistic timelines to process these withholdings. However, even with strong contracts in place, manufacturers must ensure their organizations have the technical capabilities and resources to process medical benefit rebate invoices efficiently and effectively. We highlight some key considerations pharmaceutical manufacturers should incorporate into their 340B channel management strategies.