July 24, 2020

(Washington, D.C.) — Pharmaceutical Care Management Association (PCMA) President and CEO JC Scott issued the following statement on the Administration’s Executive Order to resurrect the rebate rule.

“The Administration’s decision last year to withdraw a proposed regulation on prescription drug rebates was the right decision. Reviving a rebate reform proposal now does not address the underlying flaws – that it will drastically increase Medicare premiums for America’s seniors and most vulnerable. This policy does nothing to address drug prices, it only serves to create uncertainty and raise premiums for seniors while imposing nearly $400 billion in additional taxpayer costs, all at a time when taxpayers are already footing additional costs to counter the pandemic and the national debt is at record levels.

Most importantly, the proposal on rebates does nothing to address manufacturers’ list prices for prescription drugs. Manufacturers—and only manufacturers—set drug prices. For the entirety of the Medicare Part D program, PBMs have succeeded in making prescription drug coverage affordable and accessible for Medicare beneficiaries. It makes no sense to upend that success.

Any notion that PBMs are padding their bottom line through rebates is demonstrably untrue. The Government Accountability Office (GAO) found in their report 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.

There are also serious legal issues that will need to be considered should the Administration seek to finalize a rule on rebate reform or implement changes to Part D midway through a plan year and after bids have been filed for an upcoming year.”

Visit the PCMA website for more information

Here are the Facts on the Proposed Rebate Rule:

  • Part D Premiums Will Increase Dramatically. Approximately 10 percent of beneficiaries would have saved more on cost sharing than they spend on premiums, and the other 90 percent would pay more. If premiums increase as much as the 25 percent suggested by the Office of the Actuary (OACT), the average monthly premium in 2020 would have increased from $38.13 to $47.66, with a proportionate increase in 2021 and future years. 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. 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.
  • 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 back 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 continuously 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, recent reports by the GAO and HHS 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 by the U.S. Department of Health and Human Services Office of Inspector General also confirms that PBM-negotiated rebates lead to lower prescription drug costs, specifically in the Medicare prescription drug program.