Saturday, 20 July, 2019


White House pulls proposal to eliminate drug rebates

White House scraps a proposal to lower U.S. drug prices Trump Administration Withdraws Drug Rebate Plan
Patty Aguilar | 11 July, 2019, 22:54

The Trump administration will no longer proceed with a large-scale overhaul of the drug-rebate industry.

The proposal would have changed the rebate program now in place for pharmacy benefit managers. Trump last week said his administration is working on an executive order to tie drug prices in USA 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White House spokesman Judd Deere said the rebate proposal was withdrawn "based on careful analysis and thorough consideration".

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.

It also raises questions about whether the administration's other efforts to lower prices will affect the pharmaceutical industry more directly.

"Only drug manufacturers have the power to set drug prices". After mostly languishing this year, shares of companies that operate large pharmacy-benefit managers rallied, with CVS Health Corp. rising 7% to $59.23 at 9:35 a.m.in NY, while UnitedHealth Group Inc. advanced 3% to $254.98.

The Trump administration is considering a proposed rule that aims to bring some USA drug prices in the Medicare program in line with lower prices paid by other countries that negotiate pricing. The pushback grew after the nonpartisan Congressional Budget Office estimated the plan would have little impact on manufacturer prices and cost Medicare $177 billion over 10 years by leading to higher premiums subsidized by taxpayers.

"The Trump administration is encouraged by continuing bipartisan conversations about legislation to reduce outrageous drug costs imposed on the American people, and President Trump will consider using any and all tools to ensure that prescription drug costs will continue to decline". Drugmakers prefer that to other approaches lawmakers are considering. Ron Wyden of OR, are trying for a compromise centered on lowering drug costs for government programs such as Medicare and Medicaid.

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

CVS, Cigna, and other major players in the pharmacy benefits management space rose in surged on Thursday after the Trump administration said it will abandon its effort to eliminate rebates from government 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. Instead, they would reimburse pharmacies for discounts provided to individuals as they fill their prescriptions.

Budget hawks within the administration saw their hand strengthened by the report. They would be better able to stay on their medications, and that could reduce Medicare hospital and outpatient spending by about $20 billion over 10 years. Meanwhile, insurers would raise premiums to compensate for the loss of rebates. PBMs would pass rebates to patients covered by Medicare and Medicaid and find a different way to increase revenue.

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