- The Washington Times - Thursday, July 11, 2019

The administration said Thursday it is canceling plans to require Medicare to pass drug-rebate savings on to seniors, saying the benefits would have been swamped by increased premiums they’d pay for their prescription drug plans.

Officials said they studied the issue and discovered that insurers count on the rebates in their own calculations for figuring out what they charge. Losing money from the rebates would force them to charge more for the plans themselves.

“We’re not going to put seniors at risk of their premiums going up,” said Health and Human Services Secretary Alex M. Azar II on Thursday. “We all agree on that, I agree on that, the president made that determination.”

The retreat is a big setback for President Trump, who has made bringing down drug prices a major part of his 2020 campaign argument. He has been thwarted on several fronts.

His push to make drug companies disclose their prices in TV ads was blocked by a federal judge Monday. Scrapping the rebate plan is also a blow to Big Pharma, which likes to blame the rebates as one driver of high costs.



“It is disappointing that despite support from policymakers on both sides of the aisle and from a wide array of consumer, patient, pharmacist and provider groups that they have decided to backtrack,” said the Pharmaceutical Research and Manufacturers of America.

The insurance lobby countered that the way to lower drug prices is for drug companies to do that.

“Drug prices and price increases are set and controlled solely by drug makers. They alone could decide to reduce prices — and can do so today,” said Matt Eyles, president and CEO of America’s Health Insurance Plans.

Judd Deere, a spokesman for the White House, said the president agreed with the move to withdraw the rebate plan, but is still committed to slashing drug prices.

“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,” he said.

HHS rolled out the rebate rule to great fanfare at the start of this year, saying it would break up a Byzantine system and force drug manufacturers to compete, in full daylight, to decrease consumers’ out-of-pocket costs.

“Drug companies would actually compete to have the lowest price, rather than the biggest kickbacks,” Mr. Azar said in a speech to the Bipartisan Policy Center in Washington, D.C.

Lobbyists for pharmacy benefits managers, or PBMs, who act as middlemen in negotiating drug pricing, said they’d already done a good job winning savings, and warned against upending the system.

Democrats, meanwhile, had predicted the proposal wouldn’t truly force drug companies to nudge down prices.

House Speaker Nancy Pelosi at the time said the proposal puts “the majority of Medicare beneficiaries at risk of higher premiums” and “puts the American taxpayer on the hook for hundreds of billions of dollars.”

The big blow came this spring when the Congressional Budget Office agreed, finding that manufacturers weren’t likely to change their pricing but would withhold some of the rebates, raising costs.

Those concerns won out in the end, though Mr. Azar said the administration did succeed in “changing the debate” around rebates, citing movement away from them in the private market.

Congress may be Mr. Trump’s best bet for enacting bold proposals in this space.

Senate Finance Committee Chairman Chuck Grassley said there’s more pressure on lawmakers now.

Mr. Azar welcomed lawmakers’ help.

“Congress, perhaps, might take this up. They have more tools than we do,” the secretary said. “They can actually look more holistically at changes to the system that could also mitigate or protect seniors from bearing any impact of [the] change.”

Mr. Grassley is pushing a bill with Senate Minority Whip Richard J. Durbin, Illinois Democrat, that compels drug companies to disclose their prices on TV, after U.S. District Court Judge Amit P. Mehta blocked Mr. Trump’s attempt to do that through regulatory action.

The judge said he did not question the administration’s motives, but said the department had gone beyond the powers conferred by Congress.

The president, meanwhile, says he is considering additional steps he can take on his own.

On Friday, he teased a “favored nations” order that would ensure American consumers do not pay more for their prescriptions than the lowest price in other countries.

Mr. Azar said the president is worried that American consumers are paying unusually high prices to prop up “the socialism of Europe,” where governments use their authority to set prices.

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