Questioning The Rebate Rule

Secretary Azar Recently Noted The Effectiveness Of PBMs Now Targeted By Agency Proposal

U.S. Department of Health and Human Services (HHS) Secretary Alex Azar will head to Capitol Hill on Tuesday where he will testify on the Trump Administration’s budget proposal before the U.S. House Committee on Energy and Commerce Subcommittee on Health.  During his testimony, the secretary is likely to be asked about the administration’s proposals to alleviate prescription drug prices.  While the Campaign for Sustainable Rx Pricing (CSRxP) supports several efforts from the administration on this issue, we encourage lawmakers to question HHS’s proposed Rebate Rule.

The proposed rule would eliminate the ability of pharmacy benefit managers (PBMs) to negotiate rebates with drug makers for Medicare recipients — the only existing check in the supply chain on pharmaceutical manufacturers’ control over prices for some drugs on the public side.

The proposed rule would also have a number of negative side effects.  According to the actuaries for the Centers for Medicare and Medicaid Services (CMS), the proposed rule:

• Will hurt American seniors and people with disabilities, particularly those living on fixed-incomes. According to the government’s own actuaries at CMS, Medicare Part D premiums will increase by 25 percent overall and 19 percent in 2020 alone.  This would be the biggest increase in history.  Already out-of-control drug prices will increase even more while busting the federal budget.
• Raises costs for all American taxpayers and hikes federal spending. Federal spending will increase $196 billion from 2020-2029.  It would be the most expensive regulation in U.S. history.
• Hands Big Pharma a $100 billion bailout – rewarding drug makers’ price gouging. CMS says that Big Pharma will keep some of the dollars they currently pay in rebates and use this rule as an opportunity to line their own pockets with an increased $137 billion in overall drug spending.

As recently as November 2017, Secretary Azar noted the critical role PBMs and rebates play in securing better prices for Medicare recipients:

Alex Azar, secretary of the U.S. Department of Health and Human Services and former president of Eli Lilly, during his U.S. Senate Committee on Health, Education, Labor and Pensions (HELP) confirmation hearing:

“The President has generally spoken about the desire to ensure that Medicare is negotiating and getting the best deal possible for drugs. Part D actually has negotiation through the three or four biggest pharmacy benefit managers that negotiate and actually secure the best net pricing of any players in the commercial system.  I sat on the other side of that I can assure you of this.” (Senate HELP Committee, 11/29/17)

CSRxP encourages lawmakers to question the $200 billion Rebate Rule that would hike Medicare premiums and boost the bottom line of brand name prescription drug makers, who already enjoy the highest profit margins in the entire health care industry.

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