White House pulls proposal to eliminate drug rebates

Trump Administration Withdraws Drug Rebate Plan

Trump Administration Withdraws Drug Rebate Plan

Both price disclosure and the rebate idea were part of a strategy on drug costs that Trump announced at the White House amid much fanfare previous year.

The rule would have excluded rebates from safe harbor protections that now shelter drug makers' rebates from penalties under the federal Anti-Kickback Statute and would have formed new safe harbor protections for discounts offered directly to patients, as well as fixed-fee service arrangements between drug makers and PBMs. Trump last week said his administration is working on an executive order to tie drug prices in US government health programs to the rates paid by other industrialized nations.

The proposed rule was one that the pharmaceutical industry supported, but the PBM and insurance industry fiercely opposed.

White House spokesman Judd Deere said the Trump administration would turn its focus to prescription drug legislation before Congress, AP reported.

After two setbacks this week, President Donald Trump is now focusing his drive to curb drug costs on congressional efforts aimed at helping people on Medicare and younger generations covered by workplace plans. CVS Health Corp. and Cigna Corp. both jumped more than 7 percent, and UnitedHealth Group Inc. rose 4 percent while broader markets advanced slightly at the start of trading.

Several Democratic presidential hopefuls have also seized on drug pricing as a key issue for the 2020 elections.

The rebate rule, which was in the process of being finalized and 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.

The Trump administration has backed away from a key part of its plan to lower drug prices, Axios is reporting.

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Politico first reported the planned scrapping of the rebate rule on Thursday and the White House confirmed the decision to Reuters.

"Based on careful analysis and thorough consideration, the president has chose to withdraw the rebate rule", Deere said.

"There are still many headwinds for the supply chain, but. 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. Dick Durbin, the chamber's second-ranking Democrat, are pushing legislation that would grant the government the power to require drug companies to disclose their prices in consumer advertising.

For the pharmaceutical industry, it looked like a defeat. The rebate rule "was not good policy (since) it would have increased spending on prescription drugs even if it mildly reduced out-of-pocket costs in some cases". Drugmakers prefer that to other approaches lawmakers are considering.

Drugmakers now pay outmore than $100 billion in rebates annually. The White House credits Trump for that change, but independent experts say the trend isn't totally clear yet.

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

The rebate rule would have forced companies like Cigna and CVS to either forgo the discounts or pass them onto Medicare patients enrolled in their health insurance plans and drug plans.

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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