White House pulls drug rebate rule to relief of payers | Healthcare Dive

Dive Brief:

Dive Insight:

The Trump administration's efforts to lower drug prices have so far centered, at least publicly, on three proposals.

Two — the rebate proposal and a plan to require drugmakers list prices in television advertisements — are now on ice after the White House's decision to withdraw the rebate rule and a federal judge ruling this week to block the advertising requirement.

Neither setback comes entirely unexpected, as legal and political questions were raised early on for both proposals. An estimate by the Congressional Budget Office forecasting the rebate rule would increase federal spending dimmed the prospects for that plan, while drugmakers moved quickly to challenge in court the TV ad mandate.

"The withdrawal is as we had predicted because of the objections from Joe Grogan, the White House's Director of the Domestic Policy Council, and some lawmakers on the fiscal burden to the American payer on offsetting the impact of the rebate elimination on Medicare Part D premiums," wrote SVB Leerink analyst Ana Gupte in a Thursday note to clients.

Drugmakers favored the rebate rule, arguing their payments to PBMs did nothing to help patients afford their drugs, so announcement of the plan's scuttling comes as somewhat of a setback to the industry.

Insurers, by contrast, saw large boosts in share prices Thursday. Cigna stock rose by more than 10%, while CVS shares were up 7% and UnitedHealth 5%.

The rule would have eliminated a safe harbor provision which enables drugmakers to pay insurers and PBMs rebates and not run afoul of anti-kickback rules. Instead, drugmakers would have been encouraged to pay rebates directly to patients at the pharmacy counter, with the idea of reducing out-of-pocket expense.

Actuary estimates, however, showed that for most the expected decrease in out-of-pocket costs may not offset a forecasted rise in premiums. 

Attention now shifts to the administration's plans to link payments under Medicare Part B to drug prices in foreign countries.

That proposal, currently under review at the Office of Management and Budget, is loathed by the pharma industry, which has decried it as effectively importing "foreign price controls."

Last week, President Donald Trump said his administration was working on an executive order that would ensure what the U.S. pays for drugs is no higher than that paid by other nations. On Wednesday, he again referred to forthcoming action on drug prices.

"We have some very big moments coming up, I think, over the next week," Trump said in remarks given on his signing of an order related to kidney care.

Some analysts interpreted Trump's comments as referring or related to the proposed international price index.

A statement from HHS, emailed to BioPharma Dive, also made reference to exploration of drug importation, a long mooted but controversial idea.

"President Trump and Secretary [Alex] 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," a department spokesperson wrote.

Shares in most large drugmakers were trading down by mid-morning Thursday.

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