Drug middlemen are pushing back on the Trump administration’s effort to end drug rebates, which the administration claims are a major driver of high drug prices.
The Pharmaceutical Care Management Association, which represents drug middlemen called pharmacy benefit managers, released a report on Wednesday that laid the blame for high drug prices on drugmakers. The report is an effort to counter claims from the Trump administration that PBMs are to blame for high prices.
The conflict centers on rebates negotiated between PBMs, which oversees the drug plans for employer- and union-based health plans, and drugmakers. A rebate requires the drugmaker to cover a part of the cost of the drug after it is paid for by the consumer. The PBM then sends the savings to the insurer and keeps a cut for itself.
The administration charges that the rebate system creates a perverse incentive for high list prices because the PBM gets a share of the rebate. Therefore, the administration has argued, a PBM will only cover drugs on a plan’s formulary, which is the list of preferred drugs that an insurer will cover, if they have a higher list price in order to boost their own take.
[Related: GOP committee leaders skeptical of Trump’s bid to overhaul Medicare drug rebates]
The report, however, asserts that list prices for drugs are rising even in cases in which drugmakers do not give a rebates to PBMs.
Its example is the set of drugs covered in Medicare Part B, which are drugs that are administered in a doctor’s office like a vaccine or chemotherapy. PBMs are not allowed to negotiate for rebates to drugs covered under Part B.
The report noted that a large number of prescription drugs that have “extraordinary” drug prices are in Medicare Part B, where PBM negotiation isn’t pertinent.
The report references the chemotherapy drug BiCNU, which increased in price from $391 in 2012 for Medicare Part B to $8,530, an increase of 2,084 percent.
It also said that drug companies are launching new products at higher list prices, regardless of whether they get a rebate. The group added that brand-name companies are raising prices on new products to compensate for more competition from lower-priced generic copies of other products.
The report, conducted by the consulting firm Milliman, is the latest effort by PBMs to combat the Trump administration’s attacks on the rebate program.
Health and Human Services Secretary Alex Azar, a former pharmaceutical CEO, said that the rebate system leads to higher prices. The administration is now considering an unreleased regulation to no longer shield rebates from anti-kickback federal laws.
