This is illegal nowadays, but rebates endure between manufacturers and PBMs. It works like this: Nanufacturer sells abc drug to PBM for x price. There is an

This is illegal nowadays, but rebates endure between manufacturers and PBMs. It works like this: Nanufacturer sells abc drug to PBM for x price. There is an agreement between them, that if pbm sells y number of abc, then pbm gets a rebate. However, this gets the PBM in a jam. Now they have to somehow sell this crazy overoriced brand drug to the insurer. So they do a sleight of hand. So the PBM agrees with manufacturer to. . increase price! Why? For an edge in the conversation with insurer/employer: PBM: here's brand drug abc. Price is x^2. I am soooo good at negotiating your prices, that I was able to get it for z instead. You see! Thats a 50% price reduction. Am I not awesome. Insurer/employer: thats great. I'll be able to sell this 50% reduction off sticker to my manager. Thanks! PMB keeps gwneric competition out of formulary, ensuring no competition And eventually, PBM receives a rebate check for their troubles. And its totally legal.