The Trump administration’s 11th hour attempt to bring down high prescription drug costs succeeded in drawing swift condemnation from health care stakeholders who frequently find themselves at odds. The finalization last month of two rules intended to ease the financial burden on patients — one of which aims to establish a direct connection between what the government pays for medications under Medicare Part B and prices in other developed countries, and a second that alters the so-called rebate rule to do away with payments to middlemen and deliver discounts directly to Medicare Part D beneficiaries — was characterized as a victory for consumers by the president.
“This is a very big announcement — the biggest ever, concerning drugs and drug pricing,” Trump said. He went on to tout the “most favored nation” rule, asserting that it “will transform the way the U.S. government pays for drugs to end global freeloading on the backs of American citizens and American patients. Until now, Americans have often been charged more than twice as much for the exact same drug as other medically advanced countries.”
Critics of the move were quick to speak out, warning of unintended consequences that could adversely impact Americans’ health and pocket books.
“It defies logic that the administration is blindly proceeding with a ‘most favored nation’ policy that gives foreign governments the upper hand in deciding the value of medicines in the United States,” commented Stephen Ubl, president and chief executive officer of the Pharmaceutical Research and Manufacturers of America. “History proves that when governments take unilateral action to set prices, it disrupts patient access to treatments, discourages investment in new medicines, and threatens jobs and economic growth.”
Citing the unprecedented pace of vaccine development during the COVID-19 pandemic, he added, “This progress is possible largely because of America’s global leadership in biopharmaceutical R&D. Despite this, the administration is willing to upend the entire system.”
Similar dynamics played out around the rebate rule, which is of immediate concern to pharmacy operators since the regulation impacts the actions of PBMs.
“Currently, drug companies provide large discounts on the price of prescription medicines, including nearly $40 billion in rebates to Medicare Part D plans last year alone,” noted Trump. “Yet often, middlemen stop those discounts from going to the patients — which is what we’re interested in, not the middlemen — who need it the most.”
The president’s assertion immediately drew fire from opposite ends of the spectrum. JC Scott, president and CEO of the Pharmaceutical Care Management Association, the trade group that represents PBMs, said, “Simply put, the HHS secretary’s decision to advance the previously withdrawn rebate rule will drastically increase Medicare Part D beneficiary premiums and taxpayer costs. … PCMA will explore all possible litigation options to stop the rule from taking effect and destabilizing the Medicare Part D program.”
In some respects, PCMA’s position is remarkably similar to that of an alliance of pharmacy groups, including the National Community Pharmacists Association, the American Pharmacists Association, the National Association of Specialty Pharmacy, FMI – The Food Industry Association, and the National Grocers Association. “While we want our patients to pay less for their prescription drugs, this rule does not accomplish that,” the group said in a statement. “It will likely increase their insurance premiums and out-of-pocket costs, and may limit patients’ access to care by forcing more pharmacies to close.”
Of equal concern to the alliance is the Trump administration’s failure to address direct and indirect remuneration, the mechanism that PBMs use to claw back a portion of payments to pharmacies when they fail to meet certain criteria: “Pharmacy DIR fees are causing patient prescription drug costs to soar and limiting patient access to care as more pharmacies are forced to close. Our organizations have previously weighed in on the possible dire impact of rebate reform on pharmacies, namely late payments, lack of transparency to pharmacy reimbursement or chargeback amounts at the point of sale, unclear regulatory oversight, and costs associated with implementing such system outlined in the final rebate rule. Without pharmacy DIR fee reform, the impact of implementing a system to pass rebates on to patients at the pharmacy counter may prove disastrous for patients and pharmacies.”
The new rules are likely to face legal challenges. It is also possible that Joe Biden and his team will overturn the regulations after he becomes president on January 20. However those developments play out, it’s clear from the reaction to the Trump administration’s latest moves that much work needs to be done to make the U.S. prescription drug market more affordable for patients and more equitable for providers.