Published: Sat, July 13, 2019
Medicine | By Brett Sutton

Trump kills key drug-price proposal he once embraced

Trump kills key drug-price proposal he once embraced

The now-withdrawn rule could have undercut the incentive for PBMs to favor drugs with higher rebates over drugs, like biosimilars, that have lower costs, and proponents say that it could have allowed for increased biosimilar uptake if drug makers made the decision to compete on price.

The iShares U.S. Healthcare Providers ETF (NYSEArca: IHF) jumped 3.7% on Thursday, breaking back above its 200-day simple moving average. Those include "inflation rebates" that drugmakers would be pay directly to Medicare if they raise prices beyond a yet-to-be-determined measure.

It was not immediately clear whether that meant the end of the debate on rebates because other proposals on the same issue could surface on Capitol Hill, where lawmakers are working with the administration on drug cost legislation.

The rebate rule would have forced companies like Cigna and CVS either to forgo the discounts or pass them onto Medicare patients enrolled in their health insurance plans and drug plans.

"This proposal has the potential to be the most significant change in how Americans' drugs are priced at the pharmacy counter, ever", Health and Human Services Secretary Alex Azar said in January when the proposal was released.

The administration's about-face was the second setback in a week for the president's drive to lower drug prices.

Shares of health insurers such as UnitedHealth Group Inc, Cigna Corp and drug distributors like McKesson Corp rose after the report.

Deere said Trump is not backing away from his promise to lower drug prices, and the administration is setting its sights on bipartisan legislation in Congress. They pointed to the prices set by drugmakers as a better focus for efforts to reduce drug costs.

It was a defeat for the pharmaceutical industry, which had lobbied to promote rebates.


The now-scrapped proposal would have banned PBMs - or intermediaries who negotiate between drug manufacturers and insurance plans - from collecting portions of drug rebates for themselves as profit.

The Nasdaq Biotechnology Index, often viewed as a barometer of investor sentiment about drug prices, was down 1.2% in NY.

A federal judge in Washington, D.C., ruled on Monday that the administration did not have legal authority to require drugmakers to disclose list prices in their TV ads that were supposed to have started this week.

Trump first floated the idea of ending the rebates previous year as part of a drug pricing "blueprint" aimed at bringing down costs.

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.

The rebate plan was crafted by Health and Human Services Secretary Alex Azar but ran into opposition from White House budget officials.

Budget projections showed the rule could cost the federal government roughly $177 billion in the next decade, and other policy experts anxious the rule would lead to higher premiums for Medicare beneficiaries.

"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". So as far as drug price rebates go, there will be no change because of this White House reversal.

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