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End to middlemen rebates a major shift in US drug pricing

Puts onus on pharma, which cites rebates as biggest barrier


The Trump administration plans to ban rebates paid by pharma to insurance middlemen, and instead wants to see them passed directly to patients.

The proposals are aimed at lowering the cost of prescription medicines in the US, which are among the highest in the world and have risen well above inflation in recent years.

US opinion polls show many believe pharma to have the greatest responsibility for high prices, but the new measures address accusations of profiteering at pharmacy benefit managers (PBMs).

That’s because PBMs do not pass on these discounts to patients, though they insist they go towards keeping insurance premiums affordable.

Health secretary Alex Azar has now confirmed plans to remove ‘safe harbour’ provisions which allow the payments, which would then mean these payments would be judged as bribes.

He says this could reduce the high out-of-pocket payments US consumers have to pay for their prescriptions.

"This proposal has the potential to be the most significant change in how Americans' drug are price at the pharmacy counter, ever, and finally ease the burden of the sticker shock that millions of Americans experience every month for the drugs they need," Azar commented.

The changes would create a new legal exemption for prescription drug discounts that are offered directly to patients.

The Department of Human Health Services (HHS) predicts the change would lower Medicare beneficiaries’ out-of-pocket costs but increase premiums from 8 to 22% for most enrolees.

The administration said that the rule would apply to federal health programmes, though private plans could also implement the changes.

The drug lobby PhRMA welcomed the proposal, saying it could  help patients with chronic conditions such as diabetes who use insulin, which has seen steep year-on-year rises in prices.

Representatives of pharmacy benefit manager companies were  less pleased, saying the changes could impact access to medicines for Medicare users.

While at first glance, the changes seem to turn the spotlight on PBMs, they are in fact aimed at stripping away pharma’s apparent motives for yearly price increases.

The HHS said: “The proposal would also address the most significant incentive drug manufacturers cite in raising their list prices every year, the pressure to provide larger and larger rebates. This rule provides a clear pathway for drug companies instead to compete to have the lower price and out-of-pocket cost to the patient.

The changes fulfil promises made by President Trump last year as part of his medicines pricing Blueprint.

There are many other proposals being put forward in Washington for reform to bring down drug prices. Senator Mitt Romney yesterday warned the pharma industry that greater scrutiny was coming.

Romney is a member of the Senate Health, Education, Labor and Pensions Committee, which has oversight on healthcare issues, including drug pricing.

He hasn’t introduced any drug pricing legislation as yet, but confirmed this was a possibility in 2019.

Meanwhile Senate Finance Committee Chairman Charles Grassley this week launched hearings on the high cost of medicines, and a separate House Oversight Committee probe is demanding information on pricing from dozens of pharmaceutical companies.

Significant change in healthcare will require co-operation between the Republican party, who control the Senate and the Democrats, who have just taken control of the House of Representatives.

Article by
Andrew McConaghie

1st February 2019

From: Healthcare



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