July 28, 2020
(Washington, D.C.) — The Pharmaceutical Care Management Association (PCMA) is announcing the launch of a TV and digital advertising campaign on President Trump’s Executive Order to revive the so-called rebate rule. The campaign warns policymakers and the public that the Administration’s plan will drastically increase Medicare premiums for America’s seniors and most vulnerable.
“The Administration’s decision last year to withdraw a proposed regulation on prescription drug rebates was the right decision. There is no getting around the fact that reviving this proposal will significantly increase Medicare beneficiaries’ premiums,” said PCMA President and CEO JC Scott. “During a global pandemic that has caused the national debt to reach record levels, in an election year, it simply makes little sense for the Administration to backtrack on its earlier decision.”
The Administration should accept the estimates from its own Office of the Actuary (OACT) when reviewing the Executive Order’s instruction to not raise Medicare beneficiaries’ premiums or cost sharing, or federal spending.
We stand ready to work with the Administration and Congress on real solutions to reduce prescription drug costs, while protecting America’s seniors.”
Here are the Facts on the Proposed Rebate Rule:
- Part D Premiums Will Increase Dramatically: Ninety percent of beneficiaries would pay higher premiums, while only about 10 percent of beneficiaries would save more on cost sharing than they spend on premiums. If premiums increased each year and by the 25% over 10 years, as estimated by OACT, this would mark the largest average premium increase in the history of the program. Further, because Part D is voluntary, it could destabilize the program if higher premiums cause healthier beneficiaries to drop coverage or never sign up at all.
- The Proposed Rebate Rule is One of Most Expensive Regulations in History: According to the Congressional Budget Office, the Administration’s rebate reform proposal would cost taxpayers $177 billion over ten years. The Administration’s own actuaries also estimated the cost to be as high as $196 billion over 10 years, and Avalere Health estimated the proposed rule will cost taxpayers $400 billion over that time.
- Health and Human Services Secretary (HHS) Alex Azar stated that the rule would raise premiums: When the proposed rebate rule was withdrawn last year, HHS Secretary Alex Azar said: “The president is deeply committed to protecting America’s seniors. He does not want any risk that any action could cause seniors’ premiums to increase.”
- Poll – Medicare Part D Beneficiaries are Concerned about Proposed Changes to Drug Plans: Senior registered voters enrolled in Medicare Part D will be less likely to support the reelection of their members of Congress and presidential candidates if those elected officials backed proposals eliminating prescription drug negotiations and price concessions that would result in Part D premium increases, according to a poll from North Star Opinion Research.
- The Proposed Rule Does Nothing to Address Prescription Drug List Prices: The Administration has continually stated its goal to lower list prices for prescription drugs, and yet the proposed rule “intends” and speculates that manufacturers might do so. The fact is the manufacturers—and only manufacturers—set drug prices. Furthermore, independent research shows that for every $100 spent in the prescription drug supply chain on branded drugs, pharmacy benefit managers (PBMs) retain about two dollars, compared with $58 for drugmakers.
Recent reports by the Government Accountability Office (GAO) and HHS Office of the Inspector General (OIG) found that PBM-negotiated rebates lower prescription drug costs:
- The GAO report found that virtually all – 99.6% – prescription drug rebates negotiated by PBMs with drug manufacturers, in Medicare Part D, are passed through to plan sponsors and used to lower costs for Medicare beneficiaries.
- An HHS OIG report also confirms that PBM-negotiated rebates lead to lower prescription drug costs, specifically in the Medicare prescription drug program.
PCMA is the national association representing America’s pharmacy benefit managers (PBMs). PBMs administer prescription drug plans for more than 266 million Americans who have health insurance from a variety of sponsors including: commercial health plans, self-insured employer plans, union plans, Medicare Part D plans, the Federal Employees Health Benefits Program (FEHBP), state government employee plans, Medicaid plans, and others.