Medicine

Trump Administration Withdraws Drug Rebate Plan

Trump Administration Withdraws Drug Rebate Plan

"Pharma and biotech seem to have drawn the ire of the administration more recently", said Coldwell, noting the industry's successful legal challenge of a rule that would have required drugmakers to include list prices in TV ads for their medicines. "Azar argued addressing rebates was necessary to decrease drug prices, but domestic policy chief Joe Grogan deemed the plan too expensive, costing about $180 billion over a decade". "But nevertheless this was a cornerstone of the blueprint".

President Donald Trump has made lowering prescription-drug costs a top priority of his administration, and ending rebates was seen as a vital part of that effort.

The now-scrapped proposal would have banned PBMs - or intermediaries who negotiate between drug manufacturers and insurance plans - from collecting portions of drug rebates for themselves as profit. His organization is an umbrella group that represents a cross section of business and consumer groups. Ron Wyden of OR, are trying for a compromise centered on lowering drug costs for government programs such as Medicare and Medicaid.

Democrats have also seized on drug pricing as a key issue for the 2020 Presidential elections, with some legislators pushing for new laws to allow the government to negotiate drug prices directly with manufacturers.

House committees are also working on legislation and Speaker Nancy Pelosi, D-Calif., remains in contact with the White House on a drug cost compromise.

But many drug companies have said that net prices - which factor in discounts and rebates negotiated by pharmacy benefit managers on behalf of employers and insurers - have increased far less, or even declined.

U.S. Secretary of Health and Human Services Alex Azar speaks with members of the press at the White House in Washington, U.S. June 24, 2019.

More news: Apple exporting its ‘Made in India’ iPhones to Europe

The rebate rule, which once finalized would have gone into effect next year, was estimated by the nonpartisan Congressional Budget Office to cost the government $177 billion over the next 10 years.

Shares of several big companies that manage prescription benefits started climbing early in the day.

Rebates had become a popular target of criticism in Washington after drug companies lobbied aggressively to cast them as the reason for high prices. Drugmakers prefer that to other approaches lawmakers are considering. Those include "inflation rebates" that drugmakers would be pay directly to Medicare if they raise prices beyond a yet-to-be-determined measure.

Labor Department data indicate that something different may be happening to drug prices.

Rebates are a largely unseen part of the complex world of drug pricing.

Under the administration's proposal, that arrangement would not have been permitted for Medicare and Medicaid and the managers would have had to pass the rebates to patients at the pharmacy counter. The White House credits Trump for that change, but independent experts say the trend isn't totally clear yet.

The practice, critics said, gives drugmakers a reason to keep list prices high, distorts incentives for drug plans who are supposed to prioritize the interest of their clients and leaves consumers paying more out of pocket for prescription drugs. Meanwhile, insurers would raise premiums to compensate for the loss of rebates.


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