White House pulls proposal to eliminate drug rebates

Trump abandons plan to ease drug costs for people on Medicare

The Trump administration has backed away from a key part of its plan to lower drug prices, Axios is reporting.

Pharmaceutical tablets and capsules are arranged in the shape of a US dollar sign on a table in this picture illustration taken August 20, 2014. Those include "inflation rebates" that drugmakers would pay directly to Medicare if they raise prices beyond a yet-to-be-determined measure.

But many drug companies have said that net prices - which factor in discounts and rebates negotiated by pharmacy benefit managers on behalf of employers and insurers - have increased far less, or even declined.

Shares of UnitedHealth Group Inc and CVS Health Corp were also up as were those of drug distributors like McKesson Corp and pharmacy Walgreens Boots Alliance Inc.

Pharmaceutical company shares fell, with Merck & Co, Bristol-Myers Squibb Co and Pfizer Inc all off more than 2%.

Baird analyst Eric Coldwell told the Reuters news agency that Trump was likely refocusing his reform efforts on the pharmaceutical companies themselves.

"There are still many headwinds for the supply chain, but today's news clearly rerates the space higher".

Several Democratic presidential hopefuls have also seized on drug pricing as a key issue for the 2020 elections. He said that the administration was encouraged by bipartisan discussion on legislation to control drug costs.

"It was not prudent to go forward with the rule right now", said the official, adding that it would be risky and could upset a legislative deal.

The Department of Health and Human Services said it will no longer pursue a rule that would have prohibited the payment of certain rebates on drugs in Medicare Part D and Medicaid plans.

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The administration's about-face was the second setback in a week for the president's drive to lower drug prices. "Azar argued addressing rebates was necessary to decrease drug prices, but domestic policy chief Joe Grogan deemed the plan too expensive, costing about $180 billion over a decade".

The proposed rule was one that the pharmaceutical industry supported, but the PBM and insurance industry fiercely opposed.

Politico https://www.politico.com/story/2019/07/11/white-house-drug-rebate-rule-1405884 reported the news on Thursday and the White House confirmed the decision to Reuters.

PhRMA - the main pharmaceutical industry lobby group that represents drug manufacturers - disagreed, saying in a statement that the move by the Trump administration, unfortunately, ended the only government proposal that would have provided immediate savings at the pharmacy counter for patients.

The White House on Thursday yanked its own regulation to ease the financial bite of costly medications for those on Medicare by letting them receive rebates that drugmakers now pay to insurers and middlemen.

Budget projections showed the rule could cost the federal government roughly $177 billion in the next decade, and other policy experts anxious the rule would lead to higher premiums for Medicare beneficiaries. The CBO also said that it was likely that drugmakers would not cut their prices because of the rule.

The government had hoped that by eliminating rebates of 15 percent to 30 percent, or more, of a drug's listed price, the prices would fall.

President Donald Trump speaks about kidney health at the Ronald Reagan Building and International Trade Center, accompanied by Health and Human Services Secretary Alex Azar, left, Wednesday, July 10, 2019, in Washington.

Secretary of Health and Human Services Alex Azar announced his agency is dropping a proposal meant to lower drug prices.

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