After HHS proposed eliminating drug rebates in Medicare and Medicaid to drive down prices, pharma cheered. But now, officials from both major political parties have come up with a possible alternative, according to a BioCentury report.
Instead of the proposed rule that would eliminate rebates in federal health plans, a White House official and a senior adviser to House Speaker Nancy Pelosi, D-Calif., are weighing a plan that would cap out-of-pocket spending in Medicare Part D, the publication reports, citing sources briefed on the discussions.
Whether the out-of-pocket cap will go anywhere remains to be seen; multiple drug spending, pricing and competition-pushing bills are pending in Congress already. And President Trump would of course have to sign off on the idea.
But with Trump's staff involved in the talks, it's not impossible. The idea itself came out of negotiations between the White House and Rep. Pelosi's office, BioCentury reports. And Pelosi is on record against the rebate change; after HHS proposed the new rule back in February, Pelosi quickly blasted the plan, saying it could increase premiums and boost total out-of-pocket costs for Medicare beneficiaries.
"Under the Trump Administration’s proposal, Big Pharma could see even bigger profits and even less restraint on what they charge seniors," Pelosi said in a statement at the time.
More recently, the Congressional Budget Office said the proposal would boost federal spending by $177 billion between 2020 and 2029 and increase premiums for seniors.
HHS had proposed scrapping rules that exempt rebates from federal anti-kickback laws and instead provide “safe harbor” protections to discounts for patients and a fee-based payment system for pharmacy benefits managers. In addition to the proposal for federal health plans, HHS Secretary Alex Azar quickly urged Congress to take the idea to commercial markets.
Pharma wholeheartedly supported the proposal; many executives praised the concept in earnings conference calls shortly afterward.
If the Trump administration backs away from nixing rebates, however, it would mark a loss for Azar, who’s been a big proponent of the idea, BioCentury notes. It would also hit pharma as an industry; for years amid escalating pricing scrutiny, the industry has pointed to PBM rebates as one reason prices keep climbing. Patients often pay their share based on a drug's list price rather than the discounted cost, so they don't benefit from behind-the-scenes formulary negotiations between drugmakers and PBMs.
The HHS rebate rule is one cost-control proposal among many as a yearslong pricing firestorm continues to rage. Other moves include a Florida importation law that recently caught the president’s attention, and a bill the House of Representatives is expected to consider this week to crack down on regulatory abuses that stifle competition, pay-for-delay agreements and more.