Trump administration scraps plan to ban drug rebates

Trump Administration Withdraws Drug Rebate Plan

Trump Administration Withdraws Drug Rebate Plan

"Nobody is working harder than President Trump to lower the cost of healthcare, but the administration's decision today to allow the corrupt practice of middlemen negotiators pocketing patients' money through rebates is a clear victory for big healthcare and a loss for patients", Braun, R-Ind., said in a statement.

The rule would have excluded rebates from safe harbor protections that now shelter drug makers' rebates from penalties under the federal Anti-Kickback Statute and would have formed new safe harbor protections for discounts offered directly to patients, as well as fixed-fee service arrangements between drug makers and PBMs.

Health and Human Services Secretary Alex Azar sparred with the Trump administration over the effectiveness of the strategy, according to Politico.

"Based on careful analysis and thorough consideration, the President has chose to withdraw the rebate rule", said Judd Deere, a White House spokesman.

Shares of health insurers such as UnitedHealth Group Inc, Cigna Corp and drug distributors like McKesson Corp rose after the report.

The latest development is a negative development for pharmaceutical companies who typically blame the middlemen for high drug prices. That pushback stiffened after the nonpartisan Congressional Budget Office estimated that the plan would have little effect on manufacturer prices and would cost Medicare $177 billion over 10 years by leading to higher premiums subsidized by taxpayers.

The White house did not immediately respond to Reuters request for comment.

"There are still many headwinds for the supply chain, but. pharma and biotech seem to have drawn the ire of the administration more recently", said Coldwell, noting the industry's successful legal challenge of a rule that would have required drugmakers to include list prices in TV ads for their medicines. And legislators, including House Speaker Nany Pelosi, are pushing for new laws to allow the government to negotiate drug prices directly with manufacturers. The rebate rule "was not good policy (since) it would have increased spending on prescription drugs even if it mildly reduced out-of-pocket costs in some cases".

"Based on careful analysis and thorough consideration, the president has made a decision to withdraw the rebate rule", Deere said.

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It was a defeat for the pharmaceutical industry, which had lobbied to promote rebates. Drugmakers preferred the consumer rebate approach to other ideas that lawmakers are considering.

Drugmakers now pay outmore than $100 billion in rebates annually.

But AP reported that Jim Greenwood, head of the Biotechnology Innovation Organization said in a statement, "The administration has abandoned one of the only policy solutions that would have truly lowered what patients are forced to pay out of pocket for the medicines they need".

Rebates are a largely unseen part of the complex world of drug pricing.

Under the administration's proposal, that arrangement would not have been permitted for Medicare and Medicaid and the managers would have had to pass the rebates to patients at the pharmacy counter.

The now-scrapped proposal would have banned PBMs - or intermediaries who negotiate between drug manufacturers and insurance plans - from collecting portions of drug rebates for themselves as profit.

Labor Department data indicate that something different may be happening to drug prices.

But without insurers getting the rebates, the bottom line would have been an increase in premiums.

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