Those rebates affect the market in another way: They can make it harder for some companies to offer new treatments or they can thwart less costly rival products.

“We could give [our new drug] away for free and … it would still be more economically advantageous” for insurers and PBMs to send patients to Humira first, said Andreas Kuznik, a senior director at Regeneron Pharmaceuticals, at a conference examining the cost and value of RA treatments.

Thomas Amoroso, medical director for medical policy at Tufts Health Plan, said at the same March conference that he has found drug industry sales representatives to be persistent in tracking how their drugs are positioned on plan formularies.

If insurers decide to add a new, lower-cost drug as the preferred alternative, “our Humira rep would be knocking on our door next week and saying, ‘Hey, that rebate we gave you? We’re taking it back,’” Amoroso said.

The roundtable at which they spoke was part of an assessment of RA drug pricing convened by the Institute for Clinical and Economic Review, a nonprofit that evaluates the value of medical tests and treatments for insurers and other clients.

PBMs won’t disclose the rebates they provide to clients, but studies provide a clue. It’s a huge amount of money.

The Berkeley Research Group, a consulting firm that advises major employers, said that rebates and other discounts paid to insurers, PBMs and the U.S. government for brand-name drugs grew from $67 billion in 2013 to $106 billion in 2015.

Most RA drugs are a complex type of medication, called biologics, which are made in living organisms. Nearly identical copies of biologics are called biosimilars. They hold the promise of lower prices, just as generic drugs did for less complex medications.

While several biosimilar RA treatments have won Food and Drug Administration approval, including replicas of Humira, Enbrel and Remicade, most are tied up in court battles over patents. And those biosimilars that have made it to market are now the subject of new areas of legal challenge.

In mid-September, Pfizer filed what will be a closely watched antitrust lawsuit against Johnson & Johnson. The case alleges that J&J is using exclusionary contracts and the threat of withdrawing rebates to protect Remicade from Pfizer’s lower-priced biosimilar, Inflectra, which hit the market last winter.

J&J defends its contracts, saying they are “driving deeper discounts that will lead to overall lower costs.”

Arguments For And Against Rebates

Rebates are under increasing scrutiny, amid growing alarm about soaring prescription drug prices in the United States. But the Pharmaceutical Care Management Association, the PBM industry’s trade lobby, said that complaints that rebates help fuel higher prices are unfounded.

These rebates, the lobby says, help save the health system millions of dollars by shifting dollars back to insurers or other clients, who can then use them to lower future premium increases. This year, it commissioned a study that found no correlation between rebates and the rising list prices of the top 200 brand-name drugs, suggesting higher rebates didn’t necessarily drive higher prices.

“The rebate system exists because [insurers, employers and other clients] want discounts,” said Steve Miller, chief medical officer for Express Scripts, one of the nation’s three largest PBMs.

Express Scripts offers clients an option to give patients the discount directly, but most choose not to, he said.

“While individual patients would get the benefit, everyone else’s premiums would go up [because the rebate savings would not flow back to the insurer],” Miller said. “Changing where the rebate goes doesn’t lower the price of the drug.”

But rebates play a role in what some patients pay at the pharmacy counter.

It stems from a simple calculation: whether a patient’s insurance copayment is based on a percentage of the drug’s wholesale price or the drug’s price after rebates are given to the middlemen.