Flat rebates have been the backbone of pharmaceutical contracting for decades. They’re predictable, easy to model, and familiar to both manufacturers and payers.
But in 2025, that comfort zone is eroding. Across the market, payers are testing new models that move far beyond flat discounts. Subscription pricing pilots are expanding. Outcomes-based deals are becoming less theoretical and more practical. Hybrid contracts are starting to replace one-size-fits-all rebates.
The message is clear: contracting is evolving fast.
This shift isn’t happening in a vacuum.Â
Specialty spend continues to climb, the Inflation Reduction Act (IRA) is reshaping U.S. pricing dynamics, and global pressure on drug budgets is mounting. Payers need more than cost offsets. They need risk-sharing and value clarity.
Flat discounts can’t deliver both. That’s why alternative funding models are gaining traction.
What’s Emerging on the Ground
Take Louisiana’s well-known “Netflix model” for hepatitis C: a flat subscription fee in exchange for unlimited treatment access. What began as an experiment has become a playbook that other states and payers are eyeing, especially for high-cost chronic and rare diseases.
Or consider outcomes-based deals. A decade ago, they were mostly headlines. Today, payers are quietly tying payment to reduced hospitalizations, sustained remission, or even patient adherence. Fail to deliver, and the manufacturer eats part of the cost.
Hybrid models are also multiplying. Rebates blended with outcomes triggers or volume caps give payers more levers than ever.
For manufacturers, the curveball isn’t just financial. These models demand:
- The ability to track outcomes in real-world settings.
- Infrastructure to adjudicate contracts across fragmented systems.
- Evidence packages that can withstand not only payer scrutiny, but operational feasibility tests in hospitals and IDNs.
- Cross-functional readiness: Commercial, HEOR, and Medical must be aligned.
Flat rebates don’t require this level of coordination. Subscription models and outcomes-based deals do.
Where This Could Lead
The industry is at an inflection point. Manufacturers who cling to rebate-first thinking risk being boxed out by more flexible competitors. Those who embrace alternative contracting can:
- Differentiate in payer negotiations.
- Share risk in a way that builds trust.
- Capture earlier, broader access — even if list prices remain high.
The contracting playbook is changing. The question is whether manufacturers are ready to change with it.