HHS yesterday unveiled a proposal that it says would take drug rebate money out of the hands of insurance companies and PBMs, and into the hands of consumers. Drugmakers love the idea. Insurance plans, not so much.
AHIP CEO Matt Eyles said in a statement: “We are not middlemen, we are your bargaining power. We cannot achieve those savings if our leverage and negotiating power is weakened through well-intentioned but misguided actions like this proposed rule.”
But drugmakers love the idea, with Stephen Ubl, PhRMA’s CEO, saying in a statement the plan would “fix the misaligned incentives in the system that currently result in insurers and pharmacy benefit managers favoring medicines with high list prices.”
As the Associated Press points out, HHS Secretary Alex Azar was the CEO of Eli Lilly, and critics worried that he would favor that industry. “But the drugmakers vehemently disagree with some of his other ideas, including an experiment using lower international drug prices to cut some Medicare costs,” the AP reports.
The proposal itself is somewhat complex, but it basically would take rebates from drug companies that insurers and PBMs administer, and put them directly in the hands of consumers.
“The HHS proposal would expressly exclude from safe harbor protection under the Anti-Kickback Statute rebates on prescription drugs paid by manufacturers to pharmacy benefit managers (PBMs), Part D plans and Medicaid managed care organizations,” HHS said in a press release. “It would create a new safe harbor for prescription drug discounts offered directly to patients, as well as fixed fee service arrangements between drug manufacturers and PBMs. The proposal would also provide a historic new level of transparency to a system that has been shrouded in secrecy for decades.”
Time to drag out the cliché about politics and strange bedfellows. House Speaker Nancy Pelosi seems to be siding with the insurance industry, saying that drugmakers can’t be trusted to actually help lower costs. She said that the proposal “puts the majority of Medicare beneficiaries at risk of higher premiums and total out-of-pocket costs, and puts the American taxpayer on the hook for hundreds of billions of dollars.”
The AP: “HHS officials acknowledge that Medicare prescription premiums could go up by $3 to $5 as a result of the change, but said they expect greater savings for people purchasing medications. Those patients would see their copays and cost-sharing reduced when they go to fill a prescription.”