(Washington, D.C.) — The Pharmaceutical Care Management Association (PCMA) is releasing new research showing that premiums would rise by over 50 percent if Medicare Part D plans are prohibited from negotiating rebates on brand drugs.

Manufacturers have chosen to negotiate price concessions with PBMs using rebates, which are paid months after a drug has been dispensed and are used by payers to reduce premiums and out-of-pocket costs for patients. At this time, rebates are the only usable price concession available.

Key findings from the analysis – “Premium Impact of Removing Manufacturer Rebates from the Medicare Part D Program,” include:

• Part D plan-negotiated manufacturer rebates have resulted in $34.9 billion in beneficiary premium savings for enrollees from 2014 to 2018.
• In 2017, the average Part D monthly premium of $35.63 would have been 45 percent, or $16.07, higher without rebates.
• In 2018, the average Part D monthly premium of $35.03 would have been 52 percent, or $18.36, higher without rebates.
• On an annual basis, the 2018 Part D premium would have increased from $420.24 to $640.56 without rebates.

“Public programs like Medicaid and Medicare use rebates on brand drugs to offset high prices. Simply eliminating plans’ ability to negotiate such price concessions would enrich drugmakers at the expense of patients, who’d face higher premiums and out-of-pocket costs,” said PCMA President and CEO Mark Merritt. “Worse, such a policy would do nothing to reduce drug prices. A recent report by HHS’ Office of Inspector General debunked the myth that drugmakers raise prices because of the discounts and rebates they negotiate with health plans and PBMs.”

PCMA commissioned Oliver Wyman Actuarial Consulting to conduct the research.