how do pharmaceutical rebates work

Pharmaceutical rebates are post-sale payments drug manufacturers make to pharmacy benefit managers (PBMs) or health plans to secure favorable formulary placement and reduce net drug costs. These rebates, central to the industry's gross-to-net gap, influence patient out-of-pocket costs and are under scrutiny in the FTC’s 2024 PBM Interim Staff Report. For PBM-side mechanics, see RxPBM.