The Real Price of Healthcare with Mark Cuban
a16z Podcast
00:00
Maximizing Revenue through Formulary Negotiations
Initially, negotiating formularies with companies was for ensuring the right drugs were sold, but now it is used to exclude cheaper alternatives to protect revenue. For instance, some PBMs avoid adding a cheaper alternative to Humira, Eusimri, to the formulary to maintain margins. Instead, they keep rebates from the manufacturer, only partly passing them onto companies. These rebates are sourced from copays of the oldest and sickest employees, leading to them inadvertently subsidizing the costs. Opting for employee benefit managers might not always be financially advantageous.
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