ICYMI: REPORT CONFIRMS REBATE RULE WOULD HIKE PREMIUMS, COST TAXPAYERS BILLIONS OF DOLLARS AND BOOST “DRUG COMPANY REVENUES”

Sep 8, 2020

Study Finds Rebates Negotiated By PBMs Reduce Rx Costs and Lower Premiums – Eliminating Rebates Would Increase Costs On American Seniors & Taxpayers, While Handing Big Pharma a Bailout

In case you missed it, a new report by Alex Brill of Matrix Global Advisors (MGA) confirms the administration’s misguided reboot of the Rebate Rule would raise Medicare premiums and taxpayer costs, while “drug company revenues would rise significantly.” The report, “Negative Economic Impact of Restricting Rebates in Medicare Part D,” notes that rebates “foster competition, and “where a PBM is able to negotiate a lower price for a drug by agreeing to shift market share to the drug – lead to lower prices overall.”

According to the report:

President Trump’s recent Executive Order targeting drug rebates revives a proposed rule that would restrict an important tool for providing savings to the federal government and Medicare Part D beneficiaries. Moreover, net drug costs and drug company revenues would rise significantly if the Medicare Part D safe harbor for rebates is eliminated. Numerous analyses have shown that it would not be possible to fulfill the Executive Order’s mandate not to increase federal spending, Medicare beneficiary premiums, or patients’ total out-of-pocket costs.

This adds to the overwhelming consensus the Rebate Rule would increase premiums on Medicare Part D beneficiaries, cost taxpayers more than $200 billion, hand Big Pharma a more than hundred-billion-dollar bailout and do nothing to lower prescription drug prices. According to the administration’s own actuaries at the Center for Medicare and Medicaid Services (CMS), the nonpartisan Congressional Budget Office (CBO) and industry analysts, if implemented the Rebate Rule would hike premiums for beneficiaries who rely on Medicare for their prescription drug coverage:

A 25 Percent Hike In Premiums For Medicare Part D Recipients. According to CMS actuaries, the proposed rule will increase Medicare Part D premiums for seniors and individuals with disabilities by 25 percent overall and 19 percent in 2020 alone. (Center For Medicare & Medicaid Services Office Of The Actuary, Memo On Proposed Safe Harbor Regulation, 1/31/19)
Increase Premiums for Part D Beneficiaries. The CBO found that if “rebates were no longer paid directly to plans, Part D premiums would rise.” (Congressional Budget Office, Incorporating The Effects Of The Proposed Rule On Safe Harbors For Pharmaceutical Rebates In CBO’s Budget Projections, 5/2/19)
Increase Premiums On American Seniors And Patients With Disabilities Up To 40 Percent. Analysts at Avalere Health found that under the Rebate Rule, Medicare Part D premiums could increase by as much as 40 percent. (Avalere Health, Costs for Taxpayers Could Skyrocket Under Proposed Rebate Rule, 4/8/19)
Learn more about the Rebate Rule HERE.