September 2019    OEI-03-19-00010 
 
Rebates for Brand-Name Drugs in Part D Substantially 
Reduced the Growth in Spending from 2011 to 2015  
In response to a Congressional request, OIG examined the 1,510 brand-name drugs with Part D 
reimbursement and rebates in every year from 2011 to 2015.  Specifically, we analyzed: (1) how total 
Part D reimbursement compared to rebate-adjusted reimbursement from 2011 to 2015; (2) how the size 
of the rebates changed over the 5 years; and (3) whether rebates grew in tandem with reimbursement 
across the 5 years (i.e., did rebates increase or decrease at the same level as reimbursement).  
Focusing solely on brand-name drugs with rebates in every year from 2011 to 2015, per the request, 
resulted in the exclusion of 45 percent of brand-name drugs with Part D reimbursement across all 
5 years.  In other words, 45 percent of brand-name drugs did not have rebates in every year from 2011 
to 2015.  We provide information about these brand-name drugs without rebates across all 5 years in 
Appendix A. 
 
We provide the details of our methodology in Appendix B. 
 
Questions and Responses 
Question 1.  How did total Part D reimbursement compare to total rebate-adjusted 
reimbursement? 
Total reimbursement grew much more than rebate-adjusted reimbursement for 
brand-name drugs reviewed from 2011 to 2015 
Specifically, total Part D reimbursement for brand-name drugs increased by 19 percent from 2011 to 
2015, versus a 4-percent increase in rebate-adjusted reimbursement for these drugs over the 5 years 
reviewed.1 
Rebate-adjusted reimbursement for brand-name drugs still increased by $2 billion from 
2011 to 2015  
Although total rebate-adjusted reimbursement grew less than total reimbursement for brand-name drugs 
in Part D, Medicare still spent $2 billion more for brand-name drugs with rebates in 2015 than in 2011.  
Total Part D rebate-adjusted reimbursement increased from $46 billion to $48 billion.  This increase 
occurred despite a 33-percent decrease in the total number of prescriptions for brand-name drugs 
reviewed from 2011 to 2015.  At the same time, total Part D reimbursement, not adjusted by rebates, 
increased from $55 billion to $65 billion over the same 5 years.   
 
 
 1 Part D plan sponsors may receive rebates as a form of price concession from pharmaceutical manufacturers.  We used direct 
and indirect remuneration data, which is reported annually by Part D plan sponsors to the Centers for Medicare & Medicaid 
Services (CMS), to calculate rebates for brand-name drugs in Part D.  
Rebates for Brand-Name Drugs in Part D Substantially Reduced the Growth in Spending from 2011 to 2015  1 
OEI-03-19-00010   
Question 2.  How did the size of the rebate change over the 5 years?  
Although total rebates for brand-name drugs in Part D nearly doubled from 2011 to 
2015, 42 percent of brand-name drugs had decreases in unit rebates  
From 2011 to 2015, total rebates for brand-name drugs reviewed in Part D grew from $9 billion to 
$17 billion.  While total rebates for brand-name drugs almost doubled, 42 percent of brand-name drugs 
reviewed had decreases in unit rebates between 2011 and 2015, as shown in Exhibit 1.   
Exhibit 1: Unit rebates decreased for 42 percent of 
brand-name drugs in Part D from 2011 to 2015
Increase Decrease
58% 42%
Source: OIG analysis of Medicare PartD data, 2011 to 2015.
 
Increases in rebate dollars were overwhelmingly allocated to a minority of drugs.  Specifically, 
10 percent of all brand-name drugs reviewed accounted for 60 percent ($5 billion of $8 billion) of 
rebate growth from 2011 to 2015, as shown in Exhibit 2.  In contrast, the remaining 90 percent of drugs 
accounted for only 40 percent of total rebate growth over the 5 years reviewed.  
 
Exhibit 2: Ten percent of brand-name drugs with rebates accounted 
for 60 percent of total rebate growth from 2011 to 2015
100%
80%
$3 billion
60%
1,359 drugs
40%
$5 billion
20%
151 drugs
0%
Percentage of Percentage of
brand-name drugs total rebate growth
Source: OIG analysis ofMedicare Part D data, 2011 to 2015.
 
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OEI-03-19-00010   
For the 58 percent of brand-name drugs reviewed with rebate increases from 2011 to 2015, nearly 
two-thirds had unit rebates more than double, as shown in Exhibit 3.  The percentage change for all 
drugs with rebate increases ranged from less than 1 percent (from $1.96029 to $1.96085 per unit) to 
3 million percent (from $0.0009 to $29.53 per unit).   
Exhibit 3: Nearly two-thirds of drugs with rebate increases had rebates more than double 
from 2011 to 2015
44%
15%
10% 9% 11% 11%
Increase up to Increase Increase Increase Increase Increase of
25% of 26% of 51% of 101% of 501% 2,001% or greater
to 50% to 100% to 500% to 2,000%
Source: OIG analysis of Medicare PartD data, 2011 to 2015.
 
Despite the large percentage increases, unit rebates increased by less than a penny for one-third of the 
brand-name drugs with increases in rebates, as shown in Exhibit 4.  This penny increase represented 
anywhere from a 0.03 percent to a 19,717 percent increase, depending on the drug.  In contrast, unit 
rebates increased more than $10 for only 8 percent of brand-name drugs with rebate increases.  For the 
drugs with rebate increases, unit rebates increased by $5.86 on average but increased by only $0.25 at 
the median.  
Exhibit 4: Unit rebates increased by less than a penny for one-third of the brand-name drugs with 
increases in rebates from 2011 to 2015 
33% 33% 26% 8%
Increase less than $0.01 Increase of$0.01 to $1.00 Increase of$1.01 to $10.00 Increase 
over
$10.00
Source: OIG analysis of Medicare Part D data, 2011 to 2015.
 
Of the 42 percent of brand-name drugs with decreases in rebates from 2011 to 2015, the percentage 
change ranged from a less than 1 percent to a 99.99 percent decrease.  Unit rebates for more than half 
of these brand-name drugs decreased by over 75 percent, as shown in Exhibit 5.   
Exhibit5: Over half of brand-name drugs with rebate decreases had rebates drop by 
over 75 percent from 2011 to 2015*
55%
19%
13% 14%
Decrease Decrease of 26% to Decrease of 51% to Decrease of 76% or
up to 25% 50% 75% greater
Source: OIG analysis of Medicare PartD data, 2011 to 2015.
*Percentages do not sum to 100 becauseof rounding.
Rebates for Brand-Name Drugs in Part D Substantially Reduced the Growth in Spending from 2011 to 2015  3 
OEI-03-19-00010   
However, not all of these decreases were large in absolute dollars.  In fact, one-third of brand-name 
drugs with decreases in rebates had unit rebates decline by less than one penny.  In contrast, 4 percent 
of drugs had rebates decrease by over $10, as shown in Exhibit 6.  For drugs with rebate decreases, unit 
rebates decreased by $4.29 on average and by $0.07 at the median.  
Exhibit 6: One-third of brand-name drugs with rebate decreases had unit rebates decrease 
by less than a penny from 2011 to 2015
33% 50% 13% 4%
Decrease less than $0.01 Decrease of$0.01 to $1.00 Decrease of Decrease 
$1.01 to  over
$10.00 $10.00
Source: OIG analysis of Medicare PartD data, 2011 to 2015.
 
Question 3. Did rebates grow in tandem with reimbursement? 
Rebates did not always increase when unit reimbursement increased for brand-name 
drugs reviewed from 2011 to 2015  
From 2011 to 2015, 96 percent of brand-name drugs reviewed experienced increases in unit 
reimbursement.  Although unit reimbursement increased for nearly all drugs, rebates declined as unit 
reimbursement grew for 39 percent of drugs reviewed, as shown in Exhibit 7.  For example, one drugs 
unit reimbursement increased 52 percent from 2011 to 2015, but the unit rebate for this drug decreased 
68 percent during that time.  In addition, we found that of the 171 brand-name drugs where unit 
reimbursement more than doubled, 40 drugs had decreases in unit rebates.   
Even when brand-name drugs had increases in 
Exhibit 7: Unit reimbursement increased for most  
both unit reimbursement and unit rebates, the  brand-name drugs regardless of whether unit 
increase in rebates was not always the same  rebates increased or decreased from 2011 to 2015 
magnitude as the increase in reimbursement.  
For nearly a quarter of these drugs, the 
percentage increase in unit reimbursement was 
larger than the percentage increase in unit 
rebates.  In addition, in virtually every case 
(99 percent) where a drugs unit reimbursement 
and unit rebate increased over time, the increase 
in absolute dollars for its rebate was less than 
the increase in absolute dollars for its  Source: OIG analysis of Medicare Part D data, 2011 to 2015. 
reimbursement.   
Furthermore, unit rebates as a percentage of unit reimbursement decreased for over half of Part D 
brand-name drugs reviewed.  At the median, unit rebates accounted for 1.6 percent of unit 
reimbursement in 2011 but declined to 0.3 percent of unit reimbursement in 2015.  If manufacturers 
increased rebates at the same rate as reimbursement increased, we would expect that unit rebates would 
account for the same percentage of unit reimbursement for individual drugs.  However, we found that 
percentage declined at the median from 2011 to 2015.  
 
 
 
 
 
Rebates for Brand-Name Drugs in Part D Substantially Reduced the Growth in Spending from 2011 to 2015  4 
OEI-03-19-00010   
Conclusion 
Overall, we found that increases in rebates substantially reduced the percentage increase in 
reimbursement for brand-name drugs in Part D from 2011 to 2015.  However, these rebate increases 
were not equally distributed across all brand-name drugs with Part D reimbursement.  In fact, 
60 percent ($5 billion of $8 billion) of the increase in Part D rebates from 2011 to 2015 were associated 
with only 10 percent of brand-name drugs reviewed.   
In addition, unit reimbursement increased for nearly all brand-name drugs in Part D, regardless of 
whether these drugs unit rebates increased or decreased across the 5 years reviewed.  For 39 percent of 
brand-name drugs reviewed, unit reimbursement increased as the drugs unit rebates decreased.  
Overall, at a drug-by-drug level, unit rebates did not always increase as unit reimbursement increased 
for more than half of brand-name drugs reviewed.  Although rebates substantially reduced the growth 
of total Part D spending, they did not prevent increased overall Part D spending for brand-name drugs 
from 2011 to 2015, as Medicare still spent $2 billion more for brand-name drugs with rebates in 2015 
than in 2011.     
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Appendix A: Information about Brand-Name Drugs without 
Rebates 
Nearly half of brand-name drugs with Part D reimbursement did not receive rebates in 
all 5 years reviewed 
There were 2,727 brand-name drugs with Part D reimbursement in every year from 2011 to 2015, but 
only 55 percent of these drugs (1,510 drugs) had rebates in every year reviewed.  Of the remaining 
1,217 brand-name drugs, 909 (33.3 percent) received rebates between 1 and 4 years reviewed, and 
308 drugs (11.3 percent) did not receive rebates in any year from 2011 to 2015.  Although only 
55 percent of brand-name drugs in Part D had rebates in every year reviewed, these drugs accounted for 
the vast majority of Part D reimbursement and rebates from 2011 to 2015, as shown in Exhibit 8.   
Exhibit 8: Nearly all Part D reimbursement reviewed was associated with brand-name drugs that 
had rebates in every year from 2011 to 2015* 
 
Total Part D  Percent of   Total Part D  Percent 
Number 
Reimbursement,  Part D  Rebates,   of Part D 
of drugs 
2011 to 2015  Reimbursement  2011 to 2015  Rebates 
Drugs with rebates 
1,510  $306,171,805,650  92.4%  $62,558,290,352  98.3% 
in all 5 years 
Drugs with rebates 
909  $24,668,791,680  7.4%  $1,073,661,001  1.7% 
between 1-4 years 
Drugs without 
308  $664,630,645  0.2%  $0  0.0% 
rebates in any year 
Total  2,727  $331,505,227,975  100%  $63,631,951,353  100% 
Source: OIG analysis of Medicare Part D data, 2011 to 2015.             
*Totals include rebate amounts greater than or equal to $0. 
Part D unit reimbursement for brand-name drugs without rebates was higher than unit 
reimbursement for brand-name drugs with rebates from 2011 to 2015 
On average, brand-name drugs without rebates had higher unit reimbursement than brand-name drugs 
with rebates, as shown in Exhibit 9.  Although brand-name drugs without rebates had higher unit 
reimbursement from 2011 to 2015, they had smaller increases in unit reimbursement than drugs with 
rebates across the 5 years (17 percent vs. 43 percent).   
Exhibit 9: Brand-name drugs without rebates had the highest average unit reimbursement from 
2011 to 2015  
$300
Drugs with rebates in all
5 years
$200
Drugs with rebates from
1 to 4 years
$100
Drugs without rebates in
any year
$0
2011 2012 2013 2014 2015
Source: OIG analysis of Medicare Part D data, 2011 to 2015. 
   
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Appendix B: Methodology 
We used CMSs prescription drug event (PDE) and direct and indirect remuneration (DIR) data, which 
were collected for our June 2018 data brief.2  We used PDE data as the source for Part D 
reimbursement amounts and DIR data as the source for Part D rebates for brand-name drugs.  Using 
these data, we identified the 1,510 drugs that had Part D reimbursement and rebates in each year from 
2011 to 2015.  For the purposes of this analysis, we considered each 9-digit national drug code (NDC) 
to be an individual drug.   
Question 1.  To compare total Part D reimbursement to rebate-adjusted reimbursement, we calculated 
total Part D reimbursement (i.e., drug costs paid to pharmacies) from 2011 to 2015.  Then we 
calculated total rebate-adjusted reimbursement from 2011 to 2015 by subtracting total rebates from 
total reimbursement.  We then calculated the percent change in total Part D reimbursement, the percent 
change in total rebate-adjusted reimbursement, and the percent change in total rebates for brand-name 
drugs reviewed from 2011 to 2015 and compared these changes across the 5 years.   
Question 2.  To analyze how the size of the rebate changed over the 5 years reviewed, we calculated an 
average unit rebate (referred to as unit rebate) per drug from 2011 to 2015.  We did this by dividing 
the total rebates for a brand-name drug by the total quantity of units dispensed for that drug in the same 
year.  We then determined the number and percentage of brand-name drugs with increases and 
decreases in average unit rebates from 2011 to 2015, as well as the size of the average unit rebate 
increases and decreases for each drug.  We also compared changes in average and median unit rebates 
for brand-name drugs for 2011 to 2015.   
Question 3.  To determine whether rebates increased or decreased at the same magnitude as 
reimbursement, we compared changes in average unit rebates to changes in average unit 
reimbursements (referred to as unit reimbursement) for each drug from 2011 to 2015.  We then 
determined the number and percentage of drugs with: (1) increases in both average unit reimbursements 
and average unit rebates, (2) decreases in both average unit reimbursements and average unit rebates, 
(3) increases in average unit reimbursements but decreases in average unit rebates, and (4) decreases in 
average unit reimbursements but increases in average unit rebates, from 2011 to 2015.     
We also determined how average unit rebates changed as a percentage of average unit reimbursements 
for each brand-name drug from 2011 to 2015.  We calculated average unit rebates as a percentage of 
average unit reimbursements for each drug per year to determine whether average unit rebates 
accounted for a larger or smaller percentage of average unit reimbursements from 2011 to 2015.   
Brand-name drugs without rebates in every year.  For the 2,727 brand-name drugs with Part D 
reimbursement in every year from 2011 to 2015, we categorized drugs by the number of years in which 
they received rebates (i.e., drugs that received rebates in all 5 years, drugs that received rebates in at 
least 1 but less than 5 years, and drugs without rebates in any year reviewed).3  We calculated total 
reimbursement and total rebates for each group of drugs.  We also calculated Part D reimbursement and 
rebates for each group of drugs as a percentage of total Part D reimbursement and total rebates for all 
brand-name drugs reviewed. 
 
2 OIG, Increases in Reimbursement for Brand-Name Drugs in Part D (OEI-03-15-00080), June 2018. 
3 The 9-digit NDCs included in this review are associated with the 3,578 11-digit NDCs that had utilization in each year from 
2011 to 2015 and were analyzed for the June 2018 data brief.   
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We then calculated average unit reimbursements for each group of brand-name drugs and compared 
these values from 2011 to 2015.  Finally, we compared the percent change in average unit 
reimbursements for each group of drugs from 2011 to 2015. 
Limitations 
We did not independently verify the completeness or accuracy of PDE or DIR data obtained from 
CMS.   
Standards 
We conducted this study in accordance with the Quality Standards for Inspection and Evaluation 
issued by the Council of the Inspectors General on Integrity and Efficiency. 
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