The White House has thrown out a plan to upend the drug pricing rebate model that President Trump’s health chief once said could be the “most significant change” in how medicines are priced.
Judd Deere, White House spokesman, said that the idea was pulled by Trump “based on careful analysis and thorough consideration.”
“The Trump administration is encouraged by continuing bipartisan conversations about legislation to reduce outrageous drug costs imposed on the American people, and President Trump will consider using any and all tools to ensure that prescription drug costs will continue to decline,” Deere said.
The proposal would have banned pharmacy benefit managers, the middlemen who negotiate payments for medicines on behalf of health insurance plans, from pocketing profits that come from drug company rebates. Pharmaceutical companies have blamed the practice for high drug prices and accused pharmacy benefit managers of failing to pass savings on to patients while keeping a cut for themselves and for health insurers.
The plan would have upended a common practice in the drug market in which drug companies set list prices and then pharmacy benefit managers negotiate what to actually pay for drugs. Pharmacy benefit managers could alternatively have agree to pay a specific amount to drug companies instead of setting up a rebate system.
The plan would have specifically applied to plans under Medicare and Medicaid, and would have cost the federal government $180 billion over a decade. Pharmacy benefit managers fought the idea, saying that it would cause premiums to rise for seniors.
Health and Human Services Secretary Alex Azar had rolled out the idea, saying that the plan “has the potential to be the most significant change in how Americans’ drugs are priced at the pharmacy counter, ever, and finally ease the burden of the sticker shock that millions of Americans experience every month for the drugs they need.” The plan was expected to reduce what seniors pay for drugs by about 30%.
On Thursday, Azar met with reporters to explain the shift. The decision was informed by stakeholders, he said, but was ultimately decided by Trump.
“The president is deeply committed to protecting America’s seniors,” Azar said. “Part of that commitment is he does not want any risk that our actions could cause seniors’ premiums to increase. And that was a known risk in our proposal.”
“We all agree on that, I agree on that,” he added, and went on to say that he still believed the system wasn’t transparent enough. Congress, he noted, had the authority to pass a bill that might provide for the rebate rule and extend it into private health insurance, not just government programs.
“So rebates’ days are numbered,” he said. “We’re not going to take any action that could run the risk of seniors’ premiums going up.”
The latest decision marks a second pause this week for ideas the Trump administration has put forward on lowering drug prices. On Monday a judge blocked a rule that requires pharmaceutical companies to post their list prices in commercials.
Caitlin Oakley, HHS press secretary, said in an email Thursday that Azar and the president were “taking bold action” on drug pricing by making prices more transparent, by looking at paying prices more similar to those paid by other countries, and looking into how to safely import drugs from other countries.
Cassidy Morrison contributed.
