White House Kills Plan for Drug Rebate Rule

Trump drops once-touted Medicare drug rebate plan

Trump drops once-touted Medicare drug rebate plan

The Trump administration is considering a proposed rule that aims to bring some USA drug prices in the Medicare program in line with lower prices paid by other countries.

"Based on careful analysis and thorough consideration, the President has made a decision to withdraw the rebate rule", said Judd Deere, a White House spokesman.

"We're pleased the administration recognized the impact the rebate rule would have on seniors", said CVS spokesman T.J. Crawford, "and look forward to continuing to work with all stakeholders on lowering drug costs".

The proposal would have changed the rebate program now in place for pharmacy benefit managers. On the other hand, the news is a positive development for PBMs. Drug makers such as Pfizer (PFE) and Merck (MRK) were down slightly.

The proposed rule was also expected to raise Medicare premiums, while only saving money for some beneficiaries who spend a lot on medication. Instead, drug companies would have been encouraged to pass the discounts directly to patients at the pharmacy counter. The rule reportedly faced dissent from domestic policy chief Joe Grogan and others who believed that it would be too costly to implement. He said that the administration was encouraged by bipartisan discussion on legislation to control drug costs.

The White House first launched the idea of ending the rebates a year ago as part of a drug pricing "blueprint" aimed at bringing down costs, an important election issue for Trump. "President Trump and Secretary Azar are taking bold action to end foreign free riding, examine how to safely import lower-cost prescription drugs, empower patients with meaningful transparency, and the list goes on". And legislators, including House Speaker Nany Pelosi, are pushing for new laws to allow the government to negotiate drug prices directly with manufacturers.

The end of the rebate push is likely to swing discussion back toward the pricing practices of big drugmakers, and it could add momentum to other proposals that have been floated by the administration, such as tying drug costs to an index of worldwide pharmaceutical prices. The pharmaceutical industry and many conservative groups have vocally opposed that proposal, known as the global price index, often on the grounds that it would implement "socialist" price controls.

The shift is "a substantial setback for drug manufacturers that could have seen a windfall" from the rebate overhaul, said Hunter Hammond, an analyst at Height Securities, in a note to clients.

"There are still many headwinds for the supply chain, but. pharma and biotech seem to have drawn the ire of the administration more recently", said Coldwell, noting the industry's successful legal challenge of a rule that would have required drugmakers to include list prices in TV ads for their medicines.

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