TrustWorks On Call: Rebate Bonanza

Behind the Headlines

Unpacking the forces driving healthcare's biggest stories.

1. TrumpRx website launches.

Last Thursday, the TrumpRx.gov website went live, listing coupons for 43 brand-name drugs, at cash-pay prices ranging from $3 to over $5,500, depending on the drug and quantity supplied, to be redeemed through purchases at participating pharmacies or directly from drugmakers.
The website features drugs from only five manufacturers, with Pfizer making 31 of the 43 listed drugs, but the White House said that more drugs from other companies with pricing deals, such as AbbVie and Johnson & Johnson, will be added in the coming months.
Because TrumpRx does not take insurance, every drug is marketed with the following disclaimer: “This is an out-of-pocket price. If you have insurance, check your co-pay first—it may be even lower.”

TrustWorks Take: The drugs listed on TrumpRx fall into one of three categories: a worse deal than other cash-pay options, a good cash-pay deal but worse than most insurance, and a good deal even for many insured people. At least 18 the 43 branded drugs fall into the first category because they have cheaper generic alternatives available from either GoodRx or the Mark Cuban Cost Plus Drugs Company, which have thousands (rather than dozens) of medications on their rosters. The second category includes most of the other drugs, for which the TrumpRx price is still far higher than a typical insurance copay. One extreme example of this is Pfizer’s rheumatoid arthritis drug Xeljanz, available for $1,500 per month on both TrumpRx and GoodRx versus $20 per month with most commercial insurance plans.

The third category, the only one that benefits consumers, comprises two kinds of treatments that insurance is less likely to cover: obesity and fertility. The low-dose Wegovy pill, available for $149 per month, and EMD Serrano’s fertility drug Cetrotide, available for $22.50 per month, are meaningfully discounted from their list prices, commonly not covered by insurance, and (especially in Cetrotide’s case) may even be cheaper than when purchased through insurance, depending on the plan. Therefore, while the White House may be greatly overstating the benefits of TrumpRx to the American consumer, there are at least some drugs for which Trump’s dealmaking instincts could result in real household savings.

2. Government funding deal introduces PBM reforms.

The bill signed into law last week to end a brief government shutdown featured several important healthcare provisions: funding for the Department of Health and Human Services (HHS), a five-year extension of the Acute Hospital Care at Home waiver program, a two-year extension for other Medicare telehealth flexibilities, and a few items targeting the pharmacy benefit manager (PBM) industry.
These reform provisions, drawn from previously introduced legislation and effective in 2028, require that PBMs pass through 100 percent of rebates to commercial plan sponsors, but PBMs can still charge fees at their discretion; for Medicare Part D, these fees are further limited to “bona fide service fees,” which must be flat (i.e., not based on drug prices) and tied to a service actually performed by the PBM.
The law also adds significant transparency and reporting requirements, such as strengthening the ability of commercial plan sponsors to audit PBMs, and requiring all service providers to group health plans (not just PBMs) to disclose any compensation received in connection to a plan.

TrustWorks Take: Congressional lawmakers, who have heavily scrutinized PBMs in recent years, are talking about this law as only the first step in a larger salvo to rein in the inefficiencies and abuses of drug middlemen. For example, the law does not prohibit spread pricing, where a PBM charges a plan more than it pays a pharmacy, nor does it crack down on PBMs giving preferential treatment to their own affiliated pharmacies. Still, the rebate pass-through provisions, especially the stronger form covering Medicare Part D plans, are a great first step that discourages PBMs from gaming the rebate system to maximize their own compensation while driving up costs for plans and patients.

The major PBMs have also seen these reforms coming and have begun to pivot their business practices. Cigna, which owns the nation’s largest PBM, Express Scripts, just projected stable earnings potential despite both the passage of this law and a recent settlement with the federal government requiring Express Scripts to change some business practices. One reason these companies may appear nonchalant about these reforms is that, as one expert put it, PBMs “are very good at the whack-a-mole game” and will look to “come up with alternative ways to potentially try to get around this.” The onus is on Congress to ensure the law keeps up with whatever problematic business practices PBMs turn to next.

3. HHS abandons 340B rebate pilot.

The controversial 340B rebate pilot program that the Health Resources and Services Administration (HRSA) announced last June has now been scrapped after successive court rulings concluded it likely violated the Administrative Procedure Act.
The American Hospital Association and other plaintiffs sued HHS last December to stop the program, which would have tested allowing drugmakers to charge 340B hospitals the full price for certain drugs and issue the 340B discount, typically ranging from 25 to 50 percent, as a rebate upon proof of compliance.
The pilot was set to begin on January 1, but a district court judge ordered a preliminary injunction on the program, which an appeals court upheld, leading to HHS to ask the courts to let HRSA start over on any potential rebate program.

TrustWorks Take: The endless litigation over 340B is a product of the program’s rapid expansion, growing an astonishing 23 percent in 2024 to reach $81B in discounted purchases, combined with the incompetence of HRSA, the regulatory oversight agency for 340B that seems to violate rulemaking procedures every time it attempts a reform. HRSA’s struggles stem from some combination of limited agency resources, weak statutory authority, the declining power of the administrative state, and tactical errors by leadership.

Hospitals see 340B discounts as an essential lifeline to maintain margins amid a difficult operational environment, with some saying it has come to comprise their entire margin. However, their fast-growing reliance on the program both makes programmatic reform increasingly necessary and the stakes of that reform increasingly fraught. The Trump administration is addressing at least part of this problem by transferring oversight of 340B from HRSA to the Centers for Medicare and Medicaid Services, a much more powerful and capable agency. Expect 2026 to be (another) eventful year for 340B.

Beyond the Whiteboard

Visualizing key trends from the healthcare industry

When Trust Stops Working
Last September, Robert F. Kennedy Jr. wrote in an op-ed that “restoring public trust in the Centers for Disease Control and Prevention” (CDC) was one of his primary objectives as Health Secretary. Based on the latest survey data from KFF, he is not succeeding. From December 2020 to September 2023, the percentage of Americans who have at least a fair amount of trust that the CDC provides reliable information on vaccines dropped 10 points, affirming Secretary Kennedy’s point that trust needed to be restored. Since then, it has dropped another 16 points, with the most rapid decline occurring after Trump was sworn in for his second term and began implementing the “Make America Healthy Again” agenda. Much of this decline is partisan, as Democrats tend to distrust Republican-led agencies and vice versa, but it is notable that even Republicans’ trust in the CDC’s vaccine recommendations has declined since Trump’s inauguration. The public certainly has specific trust issues with vaccines, which were polarized in the wake of the pandemic in no small part thanks to Secretary Kennedy and his ideological allies, resulting in state and local health officials losing credence since Trump was elected as well. But vaccines may only be a bellwether for a larger breakup of societal consensus. Alongside declining vaccination rates, we have also seen reduced trust in physicians and hospitals, the American mass media, and even one’s neighbors in recent years. Zooming out further, trust in the “American People” itself has been in decline for decades.

Dialing In

Sharing insights from our work with clients

Getting Back on (Partner) Track
Last week, we discussed an independent specialty group that was overly hesitant to transition promising physicians into partnership, and how the better approach is not to close partnership, but to redefine it as a group decision. This week, we’re continuing that thread by setting out some parameters for that process, with the goal of producing a codified “partnership readiness” standard that feels rigorous, transparent, and apolitical.

Partnership readiness can be measured across four domains: economic contribution; clinical quality and patient stewardship; mission and enterprise alignment; and cultural fit. I should note that “economic contribution” cannot be everything and should not just mean wRVUs. Groups regret promoting volume that comes with leakage, compliance risk, call avoidance, or poor citizenship. Partnership should reward physicians who lift performance across the enterprise. A partner should enlarge the pie through incremental capacity, new location coverage, service line expansion, improved payer performance, or leadership that increases throughput.

In this case, my physician friend hinted the real constraint seemed to be cash flow, as the partners wanted to protect their distribution pool. In these situations, solve the cash problem financially, rather than culturally. Many groups can protect distributions without throttling partnership by using ramp-in schedules, vesting, tiered distributions, buy-ins tied to valuation, and separating capital returns from labor returns. If equity truly must be more selective, create a credible non-equity lane with meaningful upside and a defined path so you are not asking great physicians to bet their careers on indefinite “maybe.”

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