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.
