July 29, 2020

(Washington, D.C.) — Pharmaceutical Care Management Association (PCMA) President and CEO JC Scott issued the following statement on the Administration’s announcement on 2021 Medicare Part D premiums.

“PCMA applauds the Administration for its work continuing the success of the Part D program. Today’s announcement shows that the 2021 and 2020 average basic premiums are the second-lowest and lowest, respectively, average basic premiums in Part D since 2013. This positive trend is due in no small part to our industry’s efforts to negotiate discounts from drug companies, which has provided unprecedented access to affordable medications to America’s seniors and disabled populations.

It is therefore unfortunate and perplexing that today’s announcement comes as the Administration is attempting to revive a rebate rule that would drastically increase Part D premiums for seniors – by 25%.

Recent reports by the Government Accountability Office and Health and Human Services Office of Inspector General confirmed that PBM-negotiated rebates lower prescription drug costs in the Medicare program.

The Administration’s decision last year to withdraw the rebate rule was the right decision. This policy would do nothing to address drug prices, but instead would destabilize the successful Part D program by raising premiums for seniors while imposing nearly $400 billion in additional taxpayer costs, all at a time when federal spending is reaching record levels to counter the pandemic.

In addition, 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.

Rather than bring back policies that threaten higher premiums for seniors, we should work together on ideas that build on the success announced by the Administration today.”

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.

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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.