Trump proposal would upend drug industry by overhauling rebates in Medicare

Trump proposal would upend drug industry by overhauling rebates in Medicare

Trump proposal would upend drug industry by overhauling rebates in Medicare

"That is a very hard task to segregate", Azar said during a conference with reporters on Friday following a speech at the Bipartisan Policy Center in Washington. Under the proposed rule, prescription drug rebates that today amount to, on average, 26 to 30 percent of a drug's list price may be passed on directly to patients and reflected in what they pay at the pharmacy counter. Experts have explained that PBMs are paid based on the spread between list prices and the prices they negotiate with manufacturers, but the secrecy that surrounds the rebates encourages drugmakers to keep raising the list prices.

The plan would take now-hidden rebates among industry players like drug companies and insurers and channel them directly to consumers when they go to pay for their medications.

The Department of Health and Human Services proposed Thursday to exclude rebates that drugmakers offer to PBMs, Medicare Part D programs and Medicaid managed care organizations from safe-harbor protection under the Anti-Kickback Statute.

The changes fulfil promises made by President Trump past year as part of his medicines pricing Blueprint.

Under the plan, the current anti-kickback exemption for industry rebates would be replaced with a new one for discounts offered directly to consumers.

"From the start, the focus on rebates has been a distraction from the real issue - the problem is the price" of the drugs, said Matt Eyles, CEO of America's Health Insurance Plans, a trade group.

PhRMA, which has long blamed pharmacy benefit managers for high prices, welcomed the proposal. Those patients with the highest costs would see the greatest benefit.

"There is no reason why those rebates should not convert equally from rebates to discounts for the patients", Azar added. But the administration also acknowledged that premiums for Medicare's prescription drug coverage could rise by about $5 a month. The proposed effective date for this safe harbor is sixty days after the publication of the final rule.

The impact for consumers would not be immediate, since the changes would take effect over the next year if all goes according to plan.

"We welcome Congress to join us", Azar said.

Late yesterday, the Trump Administration put forward a significant proposal on drug rebates. (D-N.J.) in a statement.

Nonetheless, the administration's proposal appears to be in the mix as Congress gears up to craft legislation addressing prescription drug costs. In a recent interview, Leerink analyst Ana Gupte told Healthcare Dive putting medical and pharmaceutical benefits under one umbrella makes sense. "Too many entities have to voluntarily do the right things for this to result in the intended impact that the administration would like to see".

"I think there is potential promise in a revamped system where pricing is more transparent".

"How can you possibly defend this catastrophically broken status quo that rewards higher prices, conceals kickbacks to middlemen, and denies seniors tens of billions of dollars of savings at the pharmacy counter?" he said. Because of the complicated way that the USA healthcare system works, drug companies say they're only taking home a small fraction of those increases.

"Whether list prices go down (or rise less rapidly) and by how much depends on how the various stakeholders respond to very different rules of the road", Hoadley said.

He noted a couple of ways in which the new policy could end up costing consumers more.

"Nothing in this proposal addresses high launch prices for new drugs, especially those with minimal or no competition". While just 7 biosimilars have entered the U.S. market, they have seen relatively low levels of uptake.

Ending rebates would give the administration a drug-policy "win" that doesn't directly threaten pharmaceutical company profits. "This brings in savings to them every time they walk into the pharmacy", Azar said during his speech. He declined to say whether he was working on any specific legislative proposals.