Politics Over Patients

In January of this year, HHS Secretary Alex Azar proposed a rule that would move the drug supply chain "…toward a new system that puts American patients first.” This was to be accomplished by removing safe harbor protection from the federal Anti-Kickback Statute on rebates passed to pharmacy benefit managers (PBMs) from drug manufacturers. It would have created a new safe harbor for rebates given to patients at the point of sale for Part D medications. This proposed rule was hailed by many as a way to give immediate relief to seniors from the ever-increasing cost of their medicines.

Since then, PBMs have fought hard against the proposed rule, as it would open the floodgates to the removal of rebates, not only in the Medicare realm, but eventually in the commercial space as well. The rebate system has been a boon to profits for PBMs and has even resulted in higher-priced drugs being preferred over lower priced drugs on formularies. The price concessions from manufacturers, many of which are kept by PBMs, are percentages of the list price.

The White House, HHS, and even the FDA have commented on this perverse system that rewards higher-priced drugs. It has been said that a complete disruption of the system would be necessary to reverse the ever upward-spiraling out-of-pocket cost of medications. This rule would have been the beginning of that disruption. PBMs have claimed that they lower the “cost” of medications through these rebates. Unfortunately, they only reduce the cost to themselves. PBMs never mention lowering the “price” of medications. Why would they? The higher the price, the more money they make. Does anyone care that this increases the cost share for both Medicare and commercially insured patients? Does anyone care that this also hinders lower-cost alternatives, such as biosimilars, from being preferred on formularies?

Many of the excuses given as to why this rule should not come to fruition include increasing premiums for seniors, the limited scope of the rule in not actually reducing prices, and the ever popular “sheer complexity” of the system.

Most of these reasons can be rebutted. For example, the increased premium argument falls short when it is understood that the majority of Medicare Part D beneficiaries (93%), who have no government subsidy for their premiums, take prescription drugs. Therefore, any increase in premium for this overwhelming majority will be offset by lower costs at the drug counter.

And although this rule would not necessarily reduce the price of medications, it would immediately reduce the cost of medication for Medicare beneficiaries. This would give long-needed relief to patients while the slow process of legislation passage and implementation takes place.

The tired “sheer complexity” argument often sounds something like, “We can’t even start to make a change in this complex system because to do so would be too complex.”

One of the reasons given by the administration for withdrawing this rule is that Congress is making great strides through legislation in reducing the price of drugs and therefore this rule is not needed. While we should applaud the many efforts by Congress to that end, we have witnessed partisan political stunts stymie drug pricing and PBM legislation that was supported by both sides of the aisle, putting politics over patients.

A DrugChannel.net piece alluded to another possible political motivation behind the withdrawal of the proposed rebate rule: It is possible that the final rule could have been blocked by Congress, and the entire cost of the rule estimated by the Congressional Budget Office (in this case, $177 billion over 10 years) could be spent by Congress without formal appropriation activity. Again: politics over patients.

Was political infighting within the administration a reason for withdrawal of the rebate rule? That would certainly be a sad testament to our political system. And perhaps even more egregious: Was this rule withdrawn because of the perception that it could be beneficial to pharmaceutical manufacturers in spite of the fact that it would help so many Medicare beneficiaries? Whether it is rulemaking coming out of the administration or proposed legislation in Congress, such short-sighted, narrow-minded politics has no place in decision-making while there is a drug affordability crisis facing patients in the United States.

No more politics over patients.