Proposed Rules Would Shake Up Drug Pricing by Ending Rebates to Middlemen

The Trump administration has proposed terminating rebates to middlemen to reduce prescription drug costs for American consumers, reports the Salt Lake Tribune . U.S. Department of Health and Human Services (HHS) Secretary Alex Azar late last week announced new rules under which drug manufacturers can offer discounted prices directly to consumers, without giving rebates to pharmacy benefit managers. These rules would be applicable to older Americans who purchase drugs under Medicare plans and low-income enrollees in Medicaid managed-care plans. Supportive drug policy analysts expect government insurance plans to set a strong example for private insurance firms. HHS officials estimate that drug prices following rebates tend to be 25 percent to 30 percent lower than the list price, but many consumers pay the list amount as part of their insurance deductibles and other co-payments. Officials also argue the rebate system discourages the use of lower-cost generic medications. America's Health Insurance Plans President Matt Eyles counters that insurers and the pharmacy benefit managers "are not middlemen — we are your bargaining power. We cannot achieve those savings if our leverage and negotiating power is weakened through harmful actions like this proposed rule."