White House withdraws controversial rule to eliminate drug rebates

White House withdraws controversial rule to eliminate drug rebates

The White House is scrapping a key drug price rule, while on Capitol Hill, the Senate Finance Committee could be close to action drug pricing.

In a surprise move Thursday morning, the Trump administration withdrew a rule to eliminate drug rebates.

The rebate plan was a centerpiece of the administration’s 2018 drug pricing blueprint and had been touted by Health and Human Services Secretary Alex Azar as one of the best ways to bring drug costs down.

According to HHS, the proposal would have lowered prescription drug prices and out-of-pocket costs by encouraging manufacturers to pass discounts directly on to patients at the point of sale. HHS said prescription drug rebates amount to 26 to 30 percent of a drug’s list price on average.

Drug pricing 101: Generally, a drug company pays a rebate so a pharmacy benefit manager — the third-party administrators of prescription drug programs — will make its product the only one of its kind on the list approved for reimbursement, or so that the co-pay for its product is less than the co-pay of competing products.

Winners: Pharmacy benefit managers, insurers, and Democrats like Speaker Nancy Pelosi (D-Calif.) who opposed the rule.

The Pharmaceutical Care Management Association, which represents PBMs, did not quite completely declare victory, but said high drug prices were not because of rebates.

“There is still a problem of affordability for consumers that must be addressed, and PBMs look forward to working with policymakers to advance solutions,” PCMA President and CEO JC Scott said in a statement.

“Only drug manufacturers have the power to set drug prices. We believe that the key to lowering drug costs is to enact policies that encourage greater competition.”

Losers: Drug companies, which supported the rule, making it one of the rare actions related to drug prices that drug companies supported.

Back story: The proposal had split the administration, with Azar championing it as a way to simplify the system and remove incentives for drug prices to remain high, but other White House officials pushed back, worrying about estimates that showed it could increase Medicare spending by almost $200 billion and raise premiums.

What’s next: The move increases pressure on the White House to come up with a win on other proposals, like a plan to tie Medicare drug prices to lower prices in other countries. It also puts pressure on Congress to come up with a legislative solution.

Peter Sullivan has more here.

%d bloggers like this: