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2025 Milliman Medical Index, Milliman
Pharmaceuticals are the only part of the U.S. healthcare system in which the difference between list and net prices is monetized as rebates and redistributed by intermediaries to payers. Commercial and government payers receive most or all of the value of these rebates.
Plan sponsors have multiple, non-exclusive options for how they deploy rebate funds. Data from the latest Milliman Medical Index (MMI) shows that employers primarily use rebates to offset overall healthcare costs and reduce general premiums, rather than directly lowering the out-of-pocket pharmacy costs for the patients whose prescriptions generated those rebates.
The 2025 MMI found that for 2025, pharmacy benefit rebates equated to 9% of average total healthcare costs for a single person with employer-sponsored healthcare coverage.
This analysis found that most ($525; 68%) of the value of these rebates was applied to the employer’s premium contribution, while the remainder ($243; 32%) was applied to the average employee’s premium contribution. None of the rebate value was applied to reducing out-of-pocket costs for prescriptions. As the report notes: “In most employer-sponsored PPO plans, rebates do not affect an employee’s out-of-pocket costs but could reduce employee contributions to their premiums.”
For more on this phenomenon, see Section 9.3.1. (“How Plan Sponsors Use Rebates”) in DCI’s 2025 Economic Report on U.S. Pharmacies and Pharmacy Benefit Managers.
P.S. My LinkedIn post on the Milliman report generated over 140 comments that highlighted the diversity of perspectives within the Drug Channels community.
Plan sponsors have multiple, non-exclusive options for how they deploy rebate funds. Data from the latest Milliman Medical Index (MMI) shows that employers primarily use rebates to offset overall healthcare costs and reduce general premiums, rather than directly lowering the out-of-pocket pharmacy costs for the patients whose prescriptions generated those rebates.
The 2025 MMI found that for 2025, pharmacy benefit rebates equated to 9% of average total healthcare costs for a single person with employer-sponsored healthcare coverage.
[Click to Enlarge]
This analysis found that most ($525; 68%) of the value of these rebates was applied to the employer’s premium contribution, while the remainder ($243; 32%) was applied to the average employee’s premium contribution. None of the rebate value was applied to reducing out-of-pocket costs for prescriptions. As the report notes: “In most employer-sponsored PPO plans, rebates do not affect an employee’s out-of-pocket costs but could reduce employee contributions to their premiums.”
For more on this phenomenon, see Section 9.3.1. (“How Plan Sponsors Use Rebates”) in DCI’s 2025 Economic Report on U.S. Pharmacies and Pharmacy Benefit Managers.
P.S. My LinkedIn post on the Milliman report generated over 140 comments that highlighted the diversity of perspectives within the Drug Channels community.
The Size and Growth of the 340B Program in 2024, IQVIA
Surprise? 2024 was another year of skyrocketing growth for the 340B Drug Pricing Program.
According to IQVIA, wholesale acquisition cost (WAC) list price value of 340B purchases soared to $148 billion in 2024—nearly triple the 2018 level.
DCI estimates that discounted 340B purchases totaled nearly $80 billion for 2024. That suggests a roughly $68 billion gross-to-net spread from the 340B program.
That’s a massive spread. Yet despite the scale, there's still no transparency into how billions in discounts and spreads are allocated or used. And as we pointed out two weeks ago, the contract pharmacy business continues to soar, providing billions in profits to retail chains and PBM-affiliated pharmacies. (See The 340B Contract Pharmacy Market in 2025: Big Chains and PBMs Tighten Their Grip.)
Lobbyists continue to claim that manufacturers’ attempts to gain transparency into the 340B program’s booming volume are “stripping billions of dollars from the healthcare safety net.” But once again, the data tell a very different story. Only in the U.S. healthcare system can billions more in payments and spreads be considered a cut.
P.S. ICYMI, What is Driving 340B Growth: Utilization or Price? busts another 340B myth. This study found that utilization accounted for about 80% of the 340B program’s growth based on list price, and close to 100% of growth based on 340B discount prices.
According to IQVIA, wholesale acquisition cost (WAC) list price value of 340B purchases soared to $148 billion in 2024—nearly triple the 2018 level.
DCI estimates that discounted 340B purchases totaled nearly $80 billion for 2024. That suggests a roughly $68 billion gross-to-net spread from the 340B program.
That’s a massive spread. Yet despite the scale, there's still no transparency into how billions in discounts and spreads are allocated or used. And as we pointed out two weeks ago, the contract pharmacy business continues to soar, providing billions in profits to retail chains and PBM-affiliated pharmacies. (See The 340B Contract Pharmacy Market in 2025: Big Chains and PBMs Tighten Their Grip.)
Lobbyists continue to claim that manufacturers’ attempts to gain transparency into the 340B program’s booming volume are “stripping billions of dollars from the healthcare safety net.” But once again, the data tell a very different story. Only in the U.S. healthcare system can billions more in payments and spreads be considered a cut.
P.S. ICYMI, What is Driving 340B Growth: Utilization or Price? busts another 340B myth. This study found that utilization accounted for about 80% of the 340B program’s growth based on list price, and close to 100% of growth based on 340B discount prices.
The Inflation Reduction Act (IRA): Impact on Medication Pricing, Spending, Affordability, and Access, Pioneer Institute for Public Policy Research
This Pioneer Institute study found that seniors are now paying 32% more out of pocket (on average) for drugs subject to the Inflation Reduction Act’s Maximum Fair Prices (MFP). The website has a cool interactive tool so you can dive into the data for yourself.
Why? Plans are raising copays, increasing coinsurance, and/or shifting drugs to higher formulary tiers. Such cost-shifting is another unintended—but widely anticipated—side effect of price controls.
Thanks, IRA!
Why? Plans are raising copays, increasing coinsurance, and/or shifting drugs to higher formulary tiers. Such cost-shifting is another unintended—but widely anticipated—side effect of price controls.
Thanks, IRA!
Most-Favored-Nation Prescription Drug Pricing Executive Order: Legal Issues, Congressional Research Service
The Congressional Research Service has published a highly useful writeup on the most favored nation (MFN) executive order. For anyone tracking drug pricing policy, the report provides:
- A clear summary of potential legal authorities supporting an MFN approach
- Useful discussion of legal and operational conflicts with existing programs, including the Inflation Reduction Act and the 340B Drug Pricing Program
A Long Talk With Mark Cuban, New York
Here’s a lively interview with Mark Cuban covering healthcare, PBMs, politics, sports, and more.
For those in the drug channel, check out his salty comments on the entrenched barriers to change in pharmacy benefits:
For those in the drug channel, check out his salty comments on the entrenched barriers to change in pharmacy benefits:
“Every CEO of a company that self-insures is complicit in how [******] up the health-care system is. Because we have a fundamental problem at the CEO level, where they don’t understand their health-care benefits at all, so they delegate it to HR or a benefits person, or more likely a third-party consultant, and the path to least resistance is to use the incumbent pharmacy benefit managers and insurance companies. As a result, it’s just the same thing over and over again. They sign these contracts, and the first line of the contract says, ‘You’re not allowed to disclose anything in this contract.’This provocative interview is definitely worth reading.
So, I’m on the road all the time now, going and talking to CEOs and their benefits managers and telling the benefit managers, who are terrified of going to the CEO, that they’re getting ripped off.
If I’m able to convince enough CEOs — and slowly but surely that’s happening—then the whole industry changes. Because I’m not saying to a CEO, ‘Look, it’s going to be a little bit more expensive, but just give it time and it’ll pay for itself.’ No, I’m saying, ‘We’re going to save you a [***] ton of money and your employees are going to be healthier and happier.’”
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