Drug Costs

With Rebate Rule Gone, Patients Will Suffer

July 11, 2019 2:03 pm

According to Axios, the Trump administration has killed a draft regulation that would have ensured that the millions of dollars in rebates that drug manufacturers provide to pharmacy benefit managers (PBMs) via Medicare are passed on to consumers.


Axios called the news “very good news for insurers and PBMs.”


It obviously is not good news for patients. According to POLITICO, Sen. Mike Braun (R-Ind.) called the decision “a clear victory for big health care and a loss for patients.” Sen. Braun vowed to “continue to push my legislation that forces these savings to be directly passed onto consumers.”


When the Trump administration released this rule this past January, U.S. Health and Human Services Secretary Alex Azar said the proposal had “the potential to be the most significant change in how Americans’ drugs are priced at the pharmacy counter, ever.”


Experts agreed.


The Progressive Policy Institute called the proposal “a good first step to help Medicare beneficiaries at the drug counter.” Forbes editor and Foundation for Research on Equal Opportunity Founder Avik Roy said the rule “should lead to higher utilization of low-cost generic and biosimilar drugs, as PBMs will no longer have an incentive to favor branded drugs in their formularies, unless those branded drugs compete with generics on price.”


Roy also pointed out that analysis published by Milliman, an independent actuary, estimated the regulation “could reduce federal spending on government programs by between $78 and $98 billion over the next ten years, and reduce out-of-pocket and premium costs to seniors in the Part D program by as much as 11 percent.”


Just two days ago, before news broke that the Trump administration had abandoned the rule, the Association of Mature American Citizens (AMAC) explained that another study estimated Medicare patients “battling cancer, autoimmune diseases, and other debilitating conditions could save $20 billion over the next decade.” The AMAC concluded “these changes would undoubtedly save lives” since “cost concerns are one of the most common reasons for patients to skip their pills.”


Howard Dean, former governor of Vermont, medical doctor and former Democratic presidential candidate, said the regulation would be “an important first step in the effort to bring down drug prices.”


Dean also noted the rule had generated strong opposition, and he was clear that these forces did not have American seniors’ best interests at heart. Dean said, “These critics oppose a rule that would lower seniors’ out-of-pocket expenses, while supporting other administration efforts to limit prescription-drug access for the sickest, most complicated patients. These positions harm seniors in the long run.”


This retreat from rebate reform is a disappointing turn of events that threatens the ability to holistically address what’s driving higher health-care costs for patients.