Rebates and Spreads: Pharmacy Benefit Management Practices and Corporate Citizenship

How ought we determine whether businesses in the health care sector profit fairly? One class of companies in the health care sector, pharmacy benefit managers (PBMs), deserves special consideration. We describe two specific revenue-generating practices—rebates and spread pricing—that account significantly for PBMs' profits but have been neglected in the bioethics and health policy literature as important sources of fiscal waste in our current health care system. We offer analyses of two common cases, consider employers' and employees' vulnerabilities, explore normative assumptions about how markets function, and raise questions about transparency in contract agreements between PBMs and employers. We consider ethical dimensions of PBMs' corporate citizenship in the health care sector and suggest how employers can negotiate more effectively with PBMs.