What rebate guarantees do PBMs typically offer?

PBM rebate guarantees are commitments that the plan will receive a minimum dollar amount of manufacturer rebates per script, per member, or as a percentage of brand spend. The structure varies but the math always favors brand utilization.

Common formats:

Per-script guarantee. PBM commits to passing through a fixed dollar amount of rebates per brand prescription filled. Example: $200/script on Tier 3 brands. The PBM keeps any rebate above the guarantee (or pays the difference if below).

Per-member-per-month (PMPM) guarantee. PBM commits to a fixed rebate dollar amount per member per month, regardless of utilization mix. Smooths revenue but doesn't tie payout to actual prescribing.

Percentage of brand spend. PBM commits to passing through, say, 80% of all manufacturer rebates collected on brand drugs.

The problem for plans: rebate guarantees create incentives for the PBM to maintain brand-tier placement on drugs even when generic alternatives exist. Moving a brand to a generic tier kills the rebate flow, and the PBM loses revenue. This is the structural reason why drugs like rivaroxaban remain on Tier 3 across most plans despite 17 generic manufacturers shipping.

The alternative is pass-through pricing without rebate guarantees: the PBM has no upside from brand utilization, so it has no incentive to resist generic substitution.