Trump administration proposes altering rule on drug rebates
(Reuters) – The Trump administration has proposed a rule that might reduce protections at present in place that enable rebates between drug producers and insurers and pharmacy advantages managers, in keeping with the Workplace of Administration and Finances (OMB) web site.
FILE PHOTO – A buyer waits on the counter of a CVS Pharmacy retailer in Pasadena, U.S., Could 2, 2016. REUTERS/Mario Anzuoni/File Photograph
Bloomberg first reported the existence of the proposed rule, which comes because the administration works to implement a wide-ranging plan to decrease prescription medication costs. The U.S. Division of Well being and Human Providers on Wednesday evening despatched the proposed rule to the OMB.
Particulars of the proposed rule haven’t but been made public, however its title on the OMB web site refers to eradicating the secure harbor safety for rebates from the anti-kickback legislation.
The transfer is the primary concrete signal that the Trump administration has began to overview the authorized standing of those rebates since Meals and Drug Administration Commissioner Scott Gottlieb raised the thought early this yr that they shouldn’t be exempted from anti-kickback legislation.
The anti-kickback legislation makes it unlawful to pay an incentive for medicine or providers that Medicare, Medicaid or different federal healthcare packages cowl.
Shares of drug wholesalers akin to AmerisourceBergen Corp (ABC.N) and McKesson Corp (MCK.N), and pharmacy profit managers, together with CVS Well being Corp (CVS.N) and Categorical Scripts (ESRX.O), fell barely on Thursday on the transfer.
The administration has positioned blame on “middlemen” akin to pharmacy advantages managers – which administer drug advantages for employers and well being plans – and well being insurers for driving up drug costs by demanding hefty rebates in change for the broadest entry to sufferers. Well being and Human Providers Secretary Alex Azar and Gottlieb have questioned whether or not rebates offered by drug producers ought to stay protected by federal legislation.
Well being and Human Providers and OMB didn’t instantly reply to requests for remark.
U.S. President Donald Trump made decreasing prescription drug costs a high precedence throughout his 2016 presidential marketing campaign. In Could, his administration unveiled a drug pricing blueprint that included broad proposals for decreasing costs that largely spared pharmaceutical producers and as a substitute went after pharmacy advantages managers. Pharmaceutical shares rose after the blueprint’s launch.
JP Morgan analyst Lisa Gill mentioned Wall Avenue overreacted to the proposal submitted on Wednesday as a result of rebates are just one element of pharmacy advantages managers’ revenue streams.
“If there are any changes around rebates they can adjust other aspects of the pricing model to ensure they are being paid fairly for the value they are adding,” Gill wrote.
Reporting By Yasmeen Abutaleb; modifying by Diane Craft