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 If finalized, the rule would change a system that has been in place
for decades and that has been criticized for obfuscating the real
price of prescription medicines.
The administration of U.S. President Donald Trump has been promising
to lower the cost of prescription drugs for consumers, who have seen
their out-of-pocket expenses rise each year with higher list prices
of pharmaceuticals.
The proposed rule from the U.S. Department of Health and Human
Services (HHS) would apply to companies like Cigna Corp's Express
Scripts and CVS Health Corp, as well as companies like Humana Inc
that manage Medicare prescription drug benefits, and Medicaid
managed care organizations.
"This proposal has the potential to be the most significant change
in how Americans' drugs are priced at the pharmacy counter," HHS
Secretary Alex Azar said in a statement.
Eliminating rebates on prescription drug purchases is a key element
of the Trump administration's plan to lower prescription medicine
costs. Trump made lowering drug prices a major priority during his
2016 presidential campaign.
PBMs administer drug benefits for employers and health plans and
also run large mail-order pharmacies. Drugmakers say they are under
pressure to provide rebates to the few PBMs that dominate the market
in order to gain patient access to their products by having them
included on preferred coverage lists.
Drugmakers say that PBMs do not pass on enough of those savings to
patients - a contention the PBMs dispute - and that the rebates
force them to raise the list price of medicines over time to
preserve their profits. They argue that the net revenue they
actually see has little relation to list prices.
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Democratic Senator Ron Wyden, ranking member of the Senate Finance
Committee, said in a statement that industry middlemen, such as PBMs,
"have no accountability and consumers don't see any savings at the
pharmacy counter," adding that he also wants drugmakers to lower
their list prices.
The Pharmaceutical Care Management Association, the main PBM trade
group, said eliminating rebates would drive up drug costs and
out-of-pocket expenses for consumers. The group said drugmakers
alone set prices.
Express Scripts said it was evaluating the proposed rule, but said
rebates help keep premiums low for Medicare beneficiaries.
But the Pharmaceutical Research and Manufacturers of America (PhRMA),
the main U.S. lobbying group for drugmakers, said the proposal, if
enacted, would "fix the misaligned incentives in the system."
The HHS proposal would allow rebates on prescription drugs to be
offered directly to patients, and allow PBMs to establish fixed fee
service arrangements with drugmakers that could replace lost revenue
from rebates.
An anti-kickback law makes it illegal to pay an incentive for drugs
or services that Medicare, Medicaid or other federal healthcare
programs cover. The government has been considering removing the
safe harbor protection for rebates from the anti-kickback law since
last year.
(Reporting by Caroline Humer in New York and Yasmeen Abutaleb in
Washingtong, additional reporting by Deena Beasley in Los Angeles;
editing by Bill Berkrot)
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