The Trump Administration has abandoned yet another pillar of its plan to reduce medicine prices in the US, this time its proposal to eliminate rebates from federal health plans.
“Based on careful analysis and thorough consideration, the President has decided to withdraw the rebate rule,” said a White House spokesman. First unveiled in February, the plan was to ban rebates paid by pharma to insurance middlemen – with the savings passed directly to patients – for drugs supplied under Medicare and Medicaid.
Shares in pharmacy benefit managers (PBMs) such as Cigna, UnitedHealth and CVS Health leaped upwards after it became clear that the measure – billed by the Department of Health and Human Services (HHS) as having the potential to be “the most significant change in how Americans’ drug are priced at the pharmacy counter ever” when introduced – had been killed off.
The abandoned changes would have created a new legal exemption for prescription drug discounts that are offered directly to patients, on the basis that offering rebates had created a “perverse incentive” for pharma companies to set list prices high.
It is reported that Trump scrapped the idea because he was concerned it could lead to rising health insurance premiums for older people, amid criticism from over-50s lobbying group the AARP.
It was one of the few measures outlined by Trump that had the support of the pharma industry, which has often pointed the finger at PBMs as being the main reason for high prices in the US.
It’s the second defeat for the President this week, coming after the drug industry successfully blocked an HHS plan to require television ads for medicines to publish list prices if the monthly cost is above $35. A federal court ruled that the HHS had exceeded its authority in ordering the measure.
The proposals are all 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, and have become something of a flagship campaign for Trump.
Trump’s big remaining play now is a proposal to peg the price the US is prepared to pay for medicines prescribed by a physician in a hospital or clinic to the lowest price among a list of ‘favoured nations’. That plan was laid out late last week.
“The Trump administration is encouraged by continuing bipartisan conversations about legislation to reduce outrageous drug costs imposed on the American people,” said the spokesman. “President Trump will consider using any and all tools to ensure that prescription drug costs will continue to decline,” he added.
Trump claimed that prices had gone down for the first time in more than 50 years in 2018, although that has been widely disputed, and contradicts HHS Secretary Alex Azar’s position that there were smaller and fewer drug price increases last year.
Meanwhile, an analysis by Rx Savings Solutions found more than 3,400 medicines in the US had their prices raised in the first six months of 2019, up 17% on the number of hikes from the same period of 2018.