HHS Pushes to Reduce Medicare Rebates in Medicare, Part D: Shots

The Trump Administration is proposing significant changes in Medicare's pricing and payment of prescription drugs.

The effort is designed to reduce costs for seniors at the pharmacy counter and, by its example, could cause changes in the broader prescription drug market.

The Ministry of Health and Social Services draft rule would encourage pharmaceutical companies to offer discounts directly to consumers and reduce the role of intermediaries, according to many decision-makers, which would increase the list prices of drugs and increase the costs borne by consumers.

"We will fundamentally change the way we pay for drugs in this system," said HHS secretary Alex Azar at a press briefing Friday with reporters.

The main change would be the phasing out of secretly negotiated discounts between drug manufacturers and the benefits of pharmacies. managers such as Express Scripts and CVS Caremark. These PBMs administer prescription drug plans for insurers and employers.

Part of the rebates paid by drug manufacturers now go to insurers or employers, and PBMs take a smaller share of their savings. The rule proposed by the administration would encourage companies to pass on these discounts to consumers.

The new draft regulation would put in place a price battle between pharmaceutical companies and PBM intermediaries.

Express Scripts, the second-largest pharmacy benefits manager, warned that the changes could drive up premiums for Medicare drug plans.

"A key factor in keeping premiums down for all Medicare beneficiaries, so any alteration of the impact of discounts on the market [Medicare Advantage] will increase premiums, which will cause increased costs for [the government] and the program as a whole, "said the company. in a statement to NPR.

The proposed rule would discourage these rebates for companies doing business with the Medicare drug plan by redefining them as possible illegal bribes.

"The current rebate system is set up to serve rooted interests: the pharmaceutical companies who set these prices so high and the pharmaceutical benefit directors who receive billions of dollars in rebates without the patients ever knowing where they are going the money, "said HHS Azar in his remarks prepared on Friday.

The discounts represent each year reductions of about $ 150 billion in the prescription drug market, according to the drug industry trade group PhRMA and HHS. But only a portion of the money is transferred to the insurance companies.

The current system encourages pharmaceutical companies to set high list prices, knowing that drug benefit managers will require discounts, usually calculated as a percentage of this price, if the drug is to be included in the list of drugs they cover.

The amendments, if implemented, could also make the notoriously opaque prescription drug markets more transparent, as consumers would see the reduced price negotiated by the pharmacy benefits manager when they go to pick up their medications. counter.

"It's a huge potential for change, transformer," said Dr. Walid Gellad, director of the Center for Drug Policy and Prescription at the University of Pittsburgh.

Today, the actual cost of a prescription drug is often a percentage of that of the drug. catalog price, so that these high high catalog prices end up driving up the price paid to the pharmacy. In addition, many older people receiving Medicare must pay the full cost of certain drugs.

The PhRMA, which has long blamed pharmaceutical pharmacy benefits for high prices, welcomed the proposal.

"We commend the Administration for taking steps to reform the discount system to reduce the fees charged to patients," said Stephen Ubl, President and CEO of PhRMA.

But Dr. Aaron Kesselheim, a professor at Harvard Medical School, a specialist in the economics of the pharmaceutical industry, said that this initiative alone would not reduce the price of drugs.

"We may need reforms of the intermediary system, but simply trying to eliminate the rebates without further action threatens to drive up drug prices as a whole," he said. "Discounts are an essential mechanism used by insurers to try to reduce the net prices of drugs."

Azar says that the change, if it is implemented, will encourage pharmaceutical companies to reduce their catalog prices to be competitive. But the administration also acknowledged that premiums for Medicare prescription drug coverage could increase by about $ 5 a month.