Friday, July 12, 2019

Trump Administration Drops Rebate Plan

On July 11, 2019, the Trump administration announced that it will not be moving forward on a proposed rule to eliminate arcane rebates that flow from drug manufacturers to the PBMs (Pharmacy Benefit Managers). Many employers were concerned that this ruling would have a trickle down effect and conceivably mandate that they also would be required to provide rebates for certain drugs to certain members at Point of Sale. That concern is now alleviated.

The draft measure, which was projected to raise federal spending by $177 billion over the next decade, was poised to prohibit drug rebates for treatments offered in the Medicare and Medicaid programs beginning in 2020. This drew intense backlash from the PBMs, whose operations would be significantly impacted by this action. It also drew praise from drug companies that routinely blame PBMs as the cause of the high cost of drugs.

Top PBMs, like CVS Health, warned that removing the rebates would lead to higher drug costs for seniors, an outcome that sources say the White House was concerned about before the 2020 elections.

In another blow to the pharmaceutical industry, Trump is weighing an executive order to tie prices for Medicare Part B drugs to the lowest cost available internationally, an action that would undermine profits in the sector.