Drugmakers’ Rebates For Middlemen Would Be Viewed As Illegal Kickbacks Under Trump Administration’s Proposal

The New York Times: Trump Officials Move To Lower Drug Prices By Passing On Rebates To Patients
The Trump administration proposed on Thursday to require health insurance companies and middlemen to give consumers the benefit of discounts they get on prescription drugs, a huge change that could substantially lower some patients’ costs but could also have unintended consequences. Drug makers now pay billions of dollars in rebates to such middlemen to increase the use and sales of their products. Under the proposal, these rebate payments would be viewed as illegal kickbacks, disrupting longstanding arrangements in the pharmaceutical industry. (Pear, 1/31)

The Associated Press: Prescription Discounts Channeled To Patients In Trump Plan
The proposed regulation from Health and Human Services Secretary Alex Azar would eliminate behind-the-scenes discounts among drugmakers, insurers and go-betweens and instead require that they be paid directly to consumers when they buy their medications. The idea is to do away with a hidden cost seen as contributing to artificially high list prices for prescription drugs. The proposal was co-authored with the Health and Human Services inspector general's office. (Alonso-Zaldivar, 2/1)

The Hill: Trump Officials Make New Moves To Lower Drug Prices 
Generally, a drug company pays a rebate so a pharmacy benefit manager — the third-party administrators of prescription drug programs — will make its product the only one of its kind on the list approved for reimbursement or so that the co-pay for its product is less than the co-pay of competing products. Trump administration officials have argued that if the federal anti-kickback law that protects such rebates were changed, it could help increase competition and make drugs more affordable. Critics argue the savings from the rebates aren't passed on to consumers. Insurers say they spread around the savings from discounts to lower overall premiums. (Weixel, 1/31)

Modern Healthcare: HHS Suggests Getting Rid Of Safe Harbors For Part D Drug Rebates 
The proposed rule also applies to safe harbor protections for Medicare managed-care organizations. The agency instead will propose new safe harbor protections to protect certain PBM service fees and another protection for certain price reductions made at the point of sale. (King, 1/31)

The Wall Street Journal: Trump Administration Moves To Curb Drug Rebates In Medicare, Medicaid
“This proposal has the potential to be the most significant change in how Americans’ drugs are priced at the pharmacy counter, ever, and finally ease the burden of the sticker shock that millions of Americans experience every month for the drugs they need,” HHS Secretary Alex Azar said in a statement. (Armour and Walker, 1/31)

The Washington Post: Trump Administration Proposes Big Changes In How Prescription Drugs Are Priced
Some drug policy experts praised the proposal as a strong first step, even though the changes would pertain just to the government’s two largest health insurance programs. As with many other health policies that began with those public programs and filtered into the private sector, they predicted that the government insurance plans would set a strong example for private insurers. (Goldstein and Rowland, 1/31)

Bloomberg: Trump Targets Drug Middlemen With `Devastating' Rebate Plan 
The changes are “potentially devastating to the current pharma ecosystem,” said Eric Coldwell, an analyst with Baird Equity Research. “The U.S. health-care system is a sandcastle and the tide is coming in.” Shares of major drug-plan providers fell. CVS Health Corp., which oversees drug benefits for more than 90 million Americans, fell 2.4 percent in late trading in New York, and Cigna Corp., which last year bought PBM giant Express Scripts, declined 1.4 percent. (Edney and Langreh, 1/31)

Stat: Trump Administration Pitches An End To Certain Drug Rebates 
The amount of money patients might save depends on how drug companies, pharmacy benefit managers, and insurers respond to this proposal and change their pricing practices. For the first year, HHS cites a variety of estimates that range from Medicare beneficiaries saving $2.74 a month to spending an extra $1.25 a month. Meanwhile, the government might end up saving money or might not, depending on what companies do. (Swetlitz and Florko, 1/31)

CQ: HHS Proposes Overhaul Of Drug Rebate System
The Senate Finance Committee's top Democrat, Sen. Ron Wyden of Oregon, praised the move but pushed for more action. “For years, I’ve said the middlemen have no accountability and consumers don’t see any savings at the pharmacy counter,” Wyden said. “I’m going to go the next step and push to force drug companies to lower their list prices to fully account for the removal of rebates rather than pocket the difference as a windfall.” (Clason, 1/31)

In other drug pricing and pharmaceutical news —

Stateline: To Control Drug Prices, States May Have To Face Off Against Feds
Frustrated by federal inaction, state lawmakers in 41 states have proposed detailed plans to lower soaring prescription drug costs. Some measures would give state Medicaid agencies more negotiating power. Others would disclose the pricing decisions of the drug manufacturers and the companies that administer prescription drug plans. The more ambitious proposals would bump up against federal authority, such as legislation that would allow importing drugs from Canada or alter federal statutes on the prices states pay for drugs in Medicaid. They likely would have to survive a challenge in federal court. And many likely would face resistance from a deep-pocketed pharmaceutical industry. (Ollove, 2/1)

The Hill: Drug Company Execs Under Pressure To Testify 
Drug company executives are resisting calls to testify publicly before a new GOP-led inquiry into their pricing practices, setting up a showdown with Senate Finance Committee Chairman Chuck Grassley (R-Iowa). The pressure for industry CEOs to appear before Congress is mounting as scrutiny on their business practices intensifies in Washington. On Tuesday, both the Democratic-led House Oversight and Reform Committee and the Republican-led Senate Finance Committee opened a series of hearings into drug prices.  (Sullivan, 1/31)

Stat: Romney To Drug Industry CEOs: ‘Change Is Coming’ 
In a closed-door meeting Thursday morning, Sen. Mitt Romney (R-Utah) warned the trade group for the United States’ largest drug companies that he and his new colleagues are working to address high prescription drug prices — and that the industry should participate in those discussions. “My view was that there is going to be change with regards to pharmaceutical pricing and that I think they would be wise to try and shape the reforms as opposed to hoping nothing will happen, because I think some change is coming,” Romney told STAT in a brief interview this afternoon, when asked about his message to the board of directors for PhRMA, the trade association that represents companies like Amgen, Gilead, and Eli Lilly. (Florko, 1/31)

The Hill: Romney Warns Drug Execs: 'Change Is Coming' 
“Change is going to come to pricing and the pharmaceutical industry, and that they are wise to be part of the solution as opposed to opposing change,” Romney said. (Weixel, 1/31)

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