Proposed Rule to Rein in Rebates Draws Varied Responses From Stakeholders

The Trump administration has made lowering the price of prescription drugs a key objective, highlighted in the State of the Union address when President Trump called reducing the price of drugs part of the “agenda of the American people.” One recent feature of the effort to reduce prices is HHS’ new proposed rule that would bar drug makers from giving pharmacy benefit managers (PBMs) rebates, and that would create a legal avenue by which discounts can be given directly to patients.

In his remarks to the Bipartisan Policy Center, HHS Secretary Alex Azar said that replacing the “opaque system of rebates” would “finally drive prices down … passing discounts directly on to the patient will move us toward a real market for drugs.”

Some stakeholders have welcomed the proposed rule; the Community Oncology Alliance (COA) was quick to issue a statement applauding the plan, saying that move will lower drug prices for all Americans by ensuring that the benefits of price negotiation reach patients, not just plan sponsors and PBMs. “The Administration’s proposal will directly lower drug prices and out-of-pocket costs by ensuring that patients, not PBM middlemen, receive the benefit of the discounts from manufacturers. This plan is extremely good news for patients who will now directly benefit from discounts and lower drug prices,” said COA, which also called for action on direct and indirect remuneration fees.

Drug makers also praised the move; industry group the Pharmaceutical Research and Manufacturers of America’s president and chief executive officer (CEO) Stephen J. Ubl said in a statement that the proposal will help to address misaligned incentives that result in insurers and PBMs favoring medicines with high list prices, and would particularly help patients with chronic diseases. The Association for Accessible Medicines, the industry group representing generics and biosimilars, said in its own statement that it applauds the administration’s efforts to bring down drug costs, and it added that brand-name drug makers have been using “rebate traps” to block patient access to cheaper options.

PBMs, unsurprisingly, were less enthusiastic about the proposal. The Pharmaceutical Care Management Association (PCMA), a group representing PBMs, said it was still reviewing the rule, but in a statement, PCMA’s president and CEO JC Scott, JD, said that the organization is concerned that eliminating rebates to PBMs will increase drug costs and lead to higher out-of-pocket spending for Medicare beneficiaries unless PBMs can find an alternative way to negotiate prices with drug makers. Scott added that “Drug makers alone set and raise prices,” and suggested that PBMs are the solution to, not the cause of, high drug prices.

The Academy of Managed Care Pharmacy (AMCP), too, voiced concern. Susan A. Cantrell, RPh, CAE, CEO of AMCP, said in a statement that the proposal, which focuses on rebates alone, is a diversion from creating “real solutions” to driving down drug prices. Said Cantrell, “it's unclear what would replace this important lever that payers now use to lower drug costs for millions of Americans. The HHS proposal suggests that prices would automatically fall in the absence of rebates, but we think this is unrealistic.”

Those sentiments were echoed by Matt Eyles, president and CEO of America’s Health Insurance Plans, who said in a statement that drug makers have been “working nonstop” to convey the message that health insurance providers and PBMs are driving up prices, but said “We are not middlemen—we are your bargaining power, working hard to negotiate lower prices with drug makers to save seniors and other patients about 50 percent a year on their prescription drug and related medical costs. If not for health insurance providers and PBMs, drug prices and costs would be far higher.”

HHS is taking comments on the proposed rule until April 8, 2019.