Trump Administration Withdraws Proposed Rebate Rule Blog Health Care Viewpoints

Trump abandons plan to ease drug costs for people on Medicare

President Donald Trump is withdrawing a plan to ease the financial bite of costly medications for people on Medicare by letting them receive rebates that drugmakers now pay to insurers and middlemen, the White House said Thursday.

The Trump Administration has abandoned yet another pillar of its plan to reduce medicine prices in the U.S., this time its proposal to eliminate rebates from federal health plans.

"This fight is not over, and I will continue to push my legislation that forces these savings to be directly passed onto consumers", he said. Pharmacy-benefit managers negotiate drug discounts in the form of rebates, often keeping some of that money for themselves.

In unveiling the proposal in January, Health and Human Services Secretary Alex Azar called it "an incredibly important proposal that could fundamentally change how drugs are priced and paid for at pharmacies".

Pharmacy and health insurance stocks jumped on Thursday after the White House announced it would scrap its drug rebate plan.

Budget projections showed the rule could cost the federal government roughly $177 billion in the next decade, and other policy experts anxious the rule would lead to higher premiums for Medicare beneficiaries.

The hope was the rule would have effectively pressured drugmakers to give discounts to consumers instead of middlemen, HHS secretary Alex Azar said in remarks to the media in February.


The first-year senator from Jasper said the CBO has not provided an estimated cost for his legislation, which Braun said "would bring down drug costs immediately and significantly if it were to become law".

"Based on careful analysis and thorough consideration, the president has chose to withdraw the rebate rule", White House spokesperson Judd Deere told The Hill.

"The administration has abandoned one of the only policy solutions that would have truly lowered what patients are forced to pay out of pocket for the medicines they need", Jim Greenwood, head of the Biotechnology Innovation Organization, said in a statement. Some congressional Republicans and key consumer advocacy groups anxious it would raise Medicare premiums.

The shift is "a substantial setback for drug manufacturers that could have seen a windfall" from the rebate overhaul, said Hunter Hammond, an analyst at Height Securities, in a note to clients.

It also raises questions about whether the administration's other efforts to lower prices will affect the pharmaceutical industry more directly. Here's what the White House and health policy experts are saying about the significance.

"We're pleased the administration recognized the impact the rebate rule would have on seniors", said CVS spokesman T.J. Crawford, "and look forward to continuing to work with all stakeholders on lowering drug costs". "At the end of the day, while we support the concept of getting rid of rebates, while we appreciate and are passionate about the problems and the distortions in the system caused by this opaque rebate system, we're not going to put seniors at risk of their premiums going up". They pointed to the prices set by drugmakers as a better focus for efforts to reduce drug costs.

Both price disclosure and the rebate idea were part of a strategy on drug costs that Trump announced at the White House with much fanfare a year ago. So as far as drug price rebates go, there will be no change because of this White House reversal.

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