On Thursday, HHS proposed a rule intended to reduce patients’ out-of-pocket costs for prescription drugs by blocking rebates and discounts given to pharmacy benefit managers, Part D plans, and Medicaid managed care organizations and encouraging discounts given directly to patients.
On Thursday, HHS proposed a rule intended to reduce patients’ out-of-pocket costs for prescription drugs by blocking rebates and discounts given to pharmacy benefit managers (PBMs), Part D plans, and Medicaid managed care organizations and encouraging discounts given directly to patients.
The rule would exclude rebates from safe harbor protections that currently shelter drug makers’ rebates from penalties under the federal Anti-Kickback Statute, and would create new safe harbor for discounts offered to patients, as well as fixed-fee service arrangements between drug makers and PBMs.
HHS says that the new rule will counteract incentives behind higher list prices; currently, when a list price rises, patients who pay a percentage or all of the list price for a drug see their out-of-pocket expenses increase while PBMs reap financial rewards. According to HHS, rebates that today equal 26% to 30% of a drugs’ list price may be passed directly to patients and reflected in what individuals pay at the pharmacy counter.
While those with commercial insurance will likely need to wait for Congress to act to block rebates from their plans, individuals covered under federal plans like Medicare could see substantial changes to their costs; HHS estimates that one-fourth of Part D plans require coinsurance for preferred drugs, and nearly all use coinsurance for nonpreferred drugs. Furthermore, lower list prices and upfront discounts will translate into savings during the deductible, coinsurance, and coverage gap phases of the benefit.
The proposed rule could also shake up the marketplace for biosimilars. While just 7 biosimilars have entered the US market, they have seen relatively low levels of uptake. In at least 1 of those cases, rebates have been blamed for sluggish adoption of a biosimilar product. In 2017, Pfizer, maker of a biosimilar infliximab product (Inflectra), filed suit against Johnson & Johnson (J&J), maker of the reference infliximab (Remicade), for using the so-called “rebate trap” to block biosimilar competition.
According to Pfizer, J&J threatened to withhold rebates (which often grow larger as performance metrics such as market share or volume rise, or which may be bundled together with rebates for other products) from insurers unless they agreed to exclude biosimilars from their formularies.
Pfizer also alleged that J&J simultaneously increased the list price for Remicade—causing patients to pay more out of pocket—even as it maintained its exclusive position in the market.
The proposed rule could undercut the existing incentive for PBMs to favor drugs with higher rebates over drugs, like biosimilars, that have lower costs, and could allow for increased biosimilar uptake if drug makers choose to compete on price.
HHS will receive comments for 60 days after the proposed rule appears on the Federal Register.
Eye on Pharma: Sandoz Files Antitrust Suit; Yuflyma Interchangeability; Costco’s Ustekinumab Pick
April 22nd 2025Sandoz's antitrust suit against Amgen, the FDA’s interchangeability designation for Celltrion’s adalimumab biosimilar, and the inclusion of an ustekinumab biosimilar in Costco’s prescription program highlight growing momentum to expand biosimilar access and affordability for patients with chronic inflammatory diseases.
How AI Can Help Address Cost-Related Nonadherence to Biologic, Biosimilar Treatment
March 9th 2025Despite saving billions, biosimilars still account for only a small share of the biologics market—what's standing in the way of broader adoption and how can artificial intelligence (AI) help change that?
President Trump Signs Executive Order to Bring Down Drug Prices
April 16th 2025To help bring down sky-high drug prices, President Donald Trump signed an executive order pushing for faster biosimilar development, more transparency, and tougher rules on pharmacy benefit managers—aiming to save billions and make meds more affordable for everyone.
Will the FTC Be More PBM-Friendly Under a Second Trump Administration?
February 23rd 2025On this episode of Not So Different, we explore the Federal Trade Commission’s (FTC) second interim report on pharmacy benefit managers (PBMs) with Joe Wisniewski from Turquoise Health, discussing key issues like preferential reimbursement, drug pricing transparency, biosimilars, shifting regulations, and how a second Trump administration could reshape PBM practices.
Latest Biosimilar Deals Signal Growth Across Immunology, Oncology Markets
April 14th 2025During Q1 2025, pharmaceutical companies accelerated biosimilar expansion through strategic acquisitions and partnerships in hopes of boosting patient access to lower-cost treatments in immunology and oncology.
Experts Pressure Congress to Remove Roadblocks for Biosimilars
April 12th 2025Lawmakers and expert witnesses emphasized the potential of biosimilars to lower health care costs by overcoming barriers like pharmacy benefit manager practices, limited awareness, and regulatory delays to improve access and competition in chronic disease management during a recent congressional hearing.