January 31, 2019

(Washington, D.C.) — Pharmaceutical Care Management Association (PCMA) President and CEO JC Scott issued the following statement on the Health and Human Services Office of Inspector General’s proposed rule on prescription drug rebates in Medicare:

“While we are reviewing the proposed rule, we stand ready to work with the Administration to achieve our shared goal to reduce high drug costs. Pharmacy benefit managers (PBMs) are part of the solution to high cost prescription drugs. Drugmakers alone set and raise prices.

We have been encouraged by recent proposals aimed at using more PBM tools to increase competition, reduce overall costs, and improve patients’ access to needed medications. We are concerned, however, that eliminating the long-standing safe harbor protection for drug manufacturer rebates to PBMs would increase drug costs and force Medicare beneficiaries to pay higher premiums and out-of-pocket expenses, unless there is a viable alternative for PBMs to negotiate on behalf of beneficiaries.

The Medicare prescription drug benefit has succeeded in providing affordable access to medications for Part D beneficiaries. PBMs keep coverage affordable by negotiating rebates with drugmakers, which are used to enhance benefits and reduce beneficiary cost sharing and premiums. Part D premiums have remained lower than initially projected since the program began and enrollees are highly satisfied with their prescription drug coverage.

Any proposals to eliminate PBM-negotiated rebates must consider the impact it will have on Medicare beneficiaries’ access to affordable prescription drugs.

Evidence that rebates are working to reduce prescription drug costs, includes:

  • A study by Oliver Wyman Consulting found rebates have reduced costs in Medicare Part D by $34.9 billion and eliminating them would have caused Part D premiums to increase by 52 percent in 2018.
  • Data released by the Centers for Medicare & Medicaid Services (CMS) for 2019 Part D premiums, and national average plan bids, show a negative trend for the first year since 2007. CMS cites drug manufacturer and pharmacy price concessions as a factor driving these lower costs.

A number of recent analyses prove that PBM-negotiated rebates are not correlated to drugmakers’ pricing strategies.

  • A recent study — Reconsidering Drug Prices, Rebates, and PBMs — shows drug manufacturers alone set prices – independent of rebates. The study highlights top-selling Medicare Part D brand-name drugs with steady price increases and no change in rebate levels over a five-year period from 2012 to 2017. In addition, the study analyzes a number of Medicare Part B drugs, which have no PBM rebates, and large price increases.
  • A separate Visante analysis shows no correlation between increasing prices set by drugmakers and rebates.
  • A Medicare report by HHS Office of Inspector General (OIG) found that the number of brand-name drugs with rebates dropped from 72 percent to 61 percent.

Additionally, a legal analysis, included in PCMA’s comments on the Blueprint, raises significant concerns as to whether there are any viable alternatives to rebates, in light of drug manufacturers’ inability to offer up-front discounts under current antitrust case law.