Trump’s Rebate Reversal Causing Concerns

Drug Topics JournalDrug Topics August 2019
Volume 163
Issue 8

Rule would cost $177 billion through 2029.

Pills and money

Pharmacy and healthcare groups criticized the Trump Administration’s reversal of its proposal to eliminate rebates from government drug plans.

“Based on careful analysis and thorough consideration, the President has decided to withdraw the rebate rule,” says White House Spokesman Judd Deere in a statement, CNBC reports. 

Several pharmaceutical organizations criticized the White House’s reversal. “The Administration’s decision to not move forward on the proposed rule to reform the rebate system in Medicare Part D is a blow to seniors who could have paid less for their medicines at the pharmacy counter,” says the Pharmaceutical Research and Manufacturers of America (PhRMA) in a statement.

"The decision to withdraw the drug rebate rule is a positive for the supply chain, but a setback to drug price inflation agenda and underscores the complexities of passing meaningful healthcare policy," says Ricky R. Goldwasser of Morgan Stanley.

"Drug-pricing policy initiatives must include pharmacy DIR fee relief," says Chris Krese, spokesman for NACDS. "It’s essential for reducing patients’ out-of-pocket drug costs, for advancing pharmacy viability, and for Medicare’s sustainability."

“PBMs are getting away with another win. They definitely didn’t want the proposed rule to go through,” Ronna Hauser, PharmD, vice president of pharmacy policy and regulatory affairs, tells Drug Topics. “Some of our members understand that, if it was implemented, it would be harmful. This seems to be another win or a handshake out to the PBMs. Drug costs are not being lowered at the pharmacy counter. If you fix DIR fees, you would not see the costs [rise at the pharmacy counter],” Hauser says.

NCPA submitted pages of comments with concerns about the proposed rebate rule. “We were particularly concerned that, if rebates were changed but pharmacy DIRs remained status quo, PBMs on behalf of the plans could leverage more DIR fees,” Kala Shankle, director of regulatory policy for NCPA, tells Drug Topics.

The Trump Administration initially proposed banning discounts on prescription drugs that health insurers negotiate with pharmaceutical companies in January. 

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"Most drug manufacturers supported HHS’ initiative to eliminate rebates. We now see no solution to the challenges manufacturers face regarding growing rebates. In addition, the lack of progress in Washington suggests that the industry will face ongoing political pressure," adds David Risinger, also of Morgan Stanley.

The administration says the “backdoor rebates” have led to a “perverse incentive” for drugmakers to set list prices on drugs artificially high, CNBC reports. The proposal would have given PBMs a flat fee for including drugs on their plan and would allow discounts to be passed on to patients at the pharmacy counter.

However, the Congressional Budget Office found the rule would cost $177 billion through 2029, according to CNBC.

“Of all the policies proposed in Washington right now, this was the only proposal that would provide immediate savings at the pharmacy counter, instead of only saving the government or insurance companies money. It is disappointing that, despite support from policymakers on both sides of the aisle and from a wide array of consumer, patient, pharmacist and provider groups, that they have decided to backtrack,” PhRMA says.

However, CVS Health is “pleased” with the administration’s move and “any solution should start with addressing drug prices”, says the retailer in a statement, CNBC reports. Shares of CVS Health, Cigna, and UnitedHealth surged on the rebate reversal news.

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