Trump Scraps Key Part of Plan to Lower Drug Prices

Henrietta Brewer
July 12, 2019

The Trump administration on Thursday scrapped one of its most ambitious proposals for lowering prescription medicine prices, backing down from a policy that would have required health insurers to pass on billions of dollars in rebates they receive from drugmakers to Medicare patients.

White House spokesman Judd Deere said the White House hoped to collaborate with Congress on other approaches to lowering drug costs. First unveiled in February, the plan was to ban rebates paid by pharma to insurance middlemen - with the savings passed directly to patients - for drugs supplied under Medicare and Medicaid.

The idea was to target the middlemen, pharmacy benefit managers, whose negotiations with drugmakers and insurers influence the costs consumers pay for drugs.

Right now, if you're a Medicare Part D beneficiary, and you need to pick up a drug that has a $120 list price, you might have to pay that full price, even if the middleman that negotiates on behalf of your insurer only pays a net price of $100 for it, after rebates.

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

List prices for pharmaceutical have been increasing over the past decade. That plan was laid out late last week.


"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 in a statement.

"Secretary Azar is fighting alongside President Trump to lower prescription drug costs and protect America's seniors", an HHS spokeswoman said in a statement.

According to a report by Politico, the administration has now chose to withdraw the proposed rule, first put forward in February 2019 and championed by HHS Secretary Alex Azar, who has called the use of rebates in the United States "an absolutely silly system".

Meanwhile, an analysis by Rx Savings Solutions found more than 3,400 medicines in the U.S. had their prices raised in the first six months of 2019, up 17% on the number of hikes from the same period of 2018. The CBO also said that it was likely that drugmakers would not cut their prices because of the rule.

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

Insurance companies argued that the rebates would have forced them to raise monthly premiums.


IHF's underlying portfolio includes 4.5% Cigna Corp, 9.3% CVS and 22.2% UnitedHealth Group.

US Department of Health and Human Services Secretary Alex Azar said on Thursday that Americans overpay for medicines, when compared with socialist European systems. Drug distributors like McKesson Corp and pharmacy Walgreens Boots Alliance Inc were also trading higher.

Despite reports of conflict between the two top drug pricing advisers, Grogan and Azar appeared jointly on Capitol Hill this week to encourage Republican senators to finalize a bipartisan compromise package to lower prescription drug costs. That pushback stiffened after the nonpartisan Congressional Budget Office estimated that the plan would have little effect on manufacturer prices and would cost Medicare $177 billion over 10 years by leading to higher premiums subsidized by taxpayers.

Rebates are a largely unseen part of the complex world of drug pricing.

U.S. Secretary of Health and Human Services Alex Azar speaks with members of the press at the White House in Washington, U.S. June 24, 2019.

In a briefing with reporters Thursday, Azar said the administration scrapped the plan after getting feedback from the public and stakeholders.


Other reports by iNewsToday

FOLLOW OUR NEWSPAPER