On February 1st, 2019, the Department of Health and Human Services announced a proposed new rule to lower drug prices by excluding from safe harbor protection under the Anti-Kickback Statute rebates in Medicare Part D on prescription drugs paid by manufacturers to PBMs. The rule would effectively get rid of most rebates unless they are passed on to health plans and consumers and really used to lower drug costs. The Department of Health and Human Services asked for comments on this proposal. This is an excellent reform that will lower prescription drug costs, help ensure that rebates are passed on to consumers, and curb PBM abuses and anticompetitive behavior.
Unfortunately on July 11, 2019, the Department of Health and Human Services abruptly abandoned the proposed rebate rule, without offering substantive reasons for this decision. All the administration said was, "Based on careful analysis and thorough consideration, the President has decided to withdraw the rebate rule." This abandonment of a much needed reform will hurt consumers and keep drug prices high.
Rebates contribute to higher drug costs and are often not passed on to consumers. They make our drug pricing system extremely complicated and difficult to work with. Indeed, rebates have doubled in the past five years and in 2018, drug companies paid $166 billion in rebates and price concessions to PBMs, insurers, and the supply chain.
As rebates have increased, so have the list prices of drugs. Perversely, rebates create an incentive for PBMs and payors to seek higher list prices and sales of higher-priced brand drugs over lower-cost brand and generic alternatives, which often results in higher out-of-pocket expenses for millions of Medicare beneficiaries. This is because rebates and discounts are almost always based on a percentage of the drug's list price, so the higher the list price, the higher the rebate, and the greater the PBM profits.
Accordingly, we support HHS’ proposed rule changes to eliminate rebates, thereby encouraging prices that more closely reflect actual costs, with competitive incentives to offer any discounts directly to patients at the pharmacy counter. This should eliminate a significant conflict of interest, and would be expected to result in lower costs to payors and patients overall
Below are a number of comments in support of HHS's rule to eliminate the safe harbor for most PBM rebates:
Our comments on behalf of Consumer Action, Consumer Federation of America, Consumer Reports, NETWORK Lobby for Catholic Social Justice, and U.S. PIRG in support of getting rid of most rebates. Submitted on April 8, 2019
Families USA's comments in support of the proposed rule.
AARP's comments against the proposed rule.
PhRMA's comments on the proposed rule.
Kaiser Permanente's comments on the proposed rule.
Alliance For Safe Biologic Medicines' comments in support of the proposed rule.
Association for Accessible Medicines' comments in support of the proposed rule.
Mylan comments on the proposed rule.
Pfizer comments on the proposed rule.
PCMA's comments against the proposed rule.
AHIP's comments against the proposed rule.
Unfortunately on July 11, 2019, the Department of Health and Human Services abruptly abandoned the proposed rebate rule, without offering substantive reasons for this decision. All the administration said was, "Based on careful analysis and thorough consideration, the President has decided to withdraw the rebate rule." This abandonment of a much needed reform will hurt consumers and keep drug prices high.
Rebates contribute to higher drug costs and are often not passed on to consumers. They make our drug pricing system extremely complicated and difficult to work with. Indeed, rebates have doubled in the past five years and in 2018, drug companies paid $166 billion in rebates and price concessions to PBMs, insurers, and the supply chain.
As rebates have increased, so have the list prices of drugs. Perversely, rebates create an incentive for PBMs and payors to seek higher list prices and sales of higher-priced brand drugs over lower-cost brand and generic alternatives, which often results in higher out-of-pocket expenses for millions of Medicare beneficiaries. This is because rebates and discounts are almost always based on a percentage of the drug's list price, so the higher the list price, the higher the rebate, and the greater the PBM profits.
Accordingly, we support HHS’ proposed rule changes to eliminate rebates, thereby encouraging prices that more closely reflect actual costs, with competitive incentives to offer any discounts directly to patients at the pharmacy counter. This should eliminate a significant conflict of interest, and would be expected to result in lower costs to payors and patients overall
Below are a number of comments in support of HHS's rule to eliminate the safe harbor for most PBM rebates:
Our comments on behalf of Consumer Action, Consumer Federation of America, Consumer Reports, NETWORK Lobby for Catholic Social Justice, and U.S. PIRG in support of getting rid of most rebates. Submitted on April 8, 2019
Families USA's comments in support of the proposed rule.
AARP's comments against the proposed rule.
PhRMA's comments on the proposed rule.
Kaiser Permanente's comments on the proposed rule.
Alliance For Safe Biologic Medicines' comments in support of the proposed rule.
Association for Accessible Medicines' comments in support of the proposed rule.
Mylan comments on the proposed rule.
Pfizer comments on the proposed rule.
PCMA's comments against the proposed rule.
AHIP's comments against the proposed rule.