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Trump administration scraps plan to ban drug rebates

11 July 2019

But many drug companies have said that net prices - which factor in discounts and rebates negotiated by pharmacy benefit managers on behalf of employers and insurers - have increased far less, or even declined.

Baird analyst Eric Coldwell said Trump was likely refocusing his reform efforts on the drugmakers themselves.

It also raises questions about whether the administration's other efforts to lower prices will affect the pharmaceutical industry more directly.

A federal judge in Washington, D.C., ruled on Monday that the administration did not have legal authority to require drugmakers to disclose list prices in their TV ads that were supposed to have started this week.

"Shelving the rebate reform initiative, which pharma strongly supported, feels like payback", Coldwell added.

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The Trump administration is considering a proposed rule that aims to bring some USA drug prices in the Medicare program in line with lower prices paid by other countries.

Democrats have also seized on drug pricing as a key issue for the 2020 Presidential elections, with some legislators pushing for new laws to allow the government to negotiate drug prices directly with manufacturers.

The White House first launched the idea of ending the rebates previous year as part of a drug pricing "blueprint" aimed at bringing down costs, an important election issue for Trump.

The administration's about-face was the second setback in a week for the president's drive to lower drug prices. Instead, drug companies would have been encouraged to pass the discounts directly to patients at the pharmacy counter.

President Donald Trump speaks about kidney health at the Ronald Reagan Building and International Trade Center, accompanied by Health and Human Services Secretary Alex Azar, left, Wednesday, July 10, 2019, in Washington. Most European countries pay for citizens' healthcare and directly negotiate drug prices. Drugmakers preferred the consumer rebate approach to other ideas that lawmakers are considering. That pushback stiffened after the nonpartisan Congressional Budget Office estimated that the plan would have little effect on manufacturer prices and would cost Medicare $177 billion over 10 years by leading to higher premiums subsidized by taxpayers.

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The government had hoped that by eliminating rebates of 15 percent to 30 percent, or more, of a drug's listed price, the prices would fall.

Grassley said in a statement that he had concerns about the administration's rebate rule, but was confident about the prospects for legislation.

Pharmacy and health insurance stocks jumped on Thursday after the White House announced it would scrap its drug rebate plan.

White House spokesman Judd Deere said the rebate proposal was withdrawn "based on careful analysis and thorough consideration".

The rebate plan was crafted by Health and Human Services Secretary Alex Azar but ran into opposition from White House budget officials. The rule reportedly faced dissent from domestic policy chief Joe Grogan and others who believed that it would be too costly to implement.

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A White House spokesperson said in a statement obtained by Politico the administration will "consider using any and all tools to ensure that prescription drug costs will continue to decline". Azar said on Thursday that he planned to stay in his job as long as Trump wanted him there.

Trump administration scraps plan to ban drug rebates