Medicare’s $3B Auto-Refill Scandal, The PBM Arbitrage Game Is Dying, and The House Passes a Subsidy Bill Destined for the Senate Graveyard

Hey all,

Happy Friday! It’s been a rough week for the middlemen, who were caught treating Medicare like an uncancellable subscription service just as the "gross-to-net" pricing bubble they love so dearly finally began to burst. While PBMs were busy auto-shipping $3 billion in unnecessary pills to grandma’s linen closet to pad their metrics, the market quietly shifted beneath their feet, effectively closing the arbitrage window that has funded their yachts for decades. It seems the only thing deflating faster than brand-name drug prices is the validity of a business model built entirely on opacity and waste.

Enjoy the rundown!

Jacob Brody (Co-Founder & CEO, ZorroRX)

(Drugstore Cowboy) The $3 Billion Subscription You Never Signed Up For

A Wall Street Journal investigation reveals that insurers and PBMs have dispensed roughly $3 billion in unnecessary drugs to Medicare patients over three years by utilizing automatic refill systems that ship medications far earlier than necessary. Insurer-owned mail-order pharmacies were the primary drivers of this oversupply, accounting for 37% of the excess despite filling only 9% of prescriptions, a tactic utilized to inflate adherence metrics and capture higher reimbursement. It turns out the only thing accumulating faster than the mountain of spare pills in your grandmother’s linen closet is the cash in PBM executives' pockets, all thanks to a taxpayer-funded "subscription box" from hell.

Full Article

(Modern Healthcare) House Votes to Restore Expired Health Insurance Subsidies

The U.S. House of Representatives passed legislation retroactive to January 1 to restore enhanced health insurance subsidies by a vote of 230-196, utilizing a discharge petition that successfully garnered support from seventeen Republicans to break leadership's hold. While this vote creates pressure to address rising premiums, the bill previously fell short of the 60 votes needed to break a filibuster in the upper chamber just last month. Consequently, given that the Senate already failed to clear a filibuster on this exact issue, expecting lawmakers to suddenly set aside their entrenched abortion wars to pass this bill is essentially asking for a legislative miracle. Full Article

(Drug Channels) U.S. Brand-Name Drug Prices Fell in 2025 as the Net Pricing Drug Channel Emerges

In 2025, brand-name drug list prices rose by a meager 3.5% while net prices actually declined, confirming that the massive "gross-to-net bubble" is finally deflating due to aggressive price cuts and market competition. This seismic shift marks the arrival of the "Net Pricing Drug Channel," effectively destroying the high-list-price arbitrage gap that intermediaries have long exploited to siphon billions from the healthcare system. As transparency increases and rebates evaporate, PBMs face a reckoning where they can no longer hide behind inflated sticker prices to disguise their profit-taking at the expense of patients and payers. Full Article