The high cost of some prescription drugs has been a political target of the White House and Health and Human Services Secretary Alex Azar honed in on one potential solution that he claims his department can control – drug rebates.
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The high cost of some prescription drugs has been a political target of the White House, and Department of Health and Human Services Secretary Alex Azar honed in on one potential solution that he claims his department can control – drug rebates.
The rebates are part of the cost negotiated between drugmakers, such as Pfizer, Bristol-Myers Squibb, Eli Lilly, Roche, etc. and pharmacy benefits managers (PBMs). The rebates are part of the current pricing system that are supposed to reduce the cost of prescription medications. Drugmakers, Reuters reported, face increasing pressure to “provide rebates to the few PBMs that dominate the market, which include CVS, Express Scripts and UnitedHealth’s Optum.” Those PBMs, in turn, do not pass on enough of the savings to patients, the drugmakers say, according to Reuters. The rebates, the argument goes, force drug companies to increase the price of the medication over time to “preserve” business, Reuters added.
The White House and Azar, who is a former Eli Lilly executive, are “receptive” to the argument put forth by the drugmakers, Reuters said. The PBMs, of course, disagree with the argument. Azar told Reuters that the rebate aspect of doing business “created a perverse incentive to continuously raise prices.” Last month, Azar’s HHS proposed new regulations that could scale back some protections for the rebates, Reuters said.
According to CNN, Americans, per person, spend more than $1,100 annually on prescription medicines – more than any other country in the world. That cost is something that Trump has been critical of since the campaign trail.
Not only do the PBMs disagree with the drugmakers’ argument about rebates, they also disagree with Azar that he can eliminate the rebate system on his own. The PBMs argue that will take an act of Congress, Reuters reported. The PBMs also say that the ultimate responsibility for the high cost of prescription drugs lies with the drug manufacturers who set the initial prices.
Azar told Reuters that the current rebates are a “product of previous HHS regulation.” He went on to note that what has been created by regulation can be addressed by regulation, Reuters said.
“The question of rebates may very well be fundamental to the issue of how you reverse these constant incentives to higher list prices (for medicines),” Azar told Reuters.
During his interview with Reuters, Azar pointed to President Donald Trump’s proposal to lower prescription drugs that was unveiled earlier this year. Taking aim at the rebates is part of that proposal. And, Azar said, its effects are already working as Pfizer opted to belay the second round of price increases on about 40 of its medications and other companies announced they would not be increasing prices this year.
“We are not dependent on the voluntary action of pharmaceutical companies. We are not counting on their goodwill or their altruism. ... They’re just changing because they see that’s the future,” Azar told Reuters.
Other actions that Azar noted will benefit prescription drug consumers includes a Food and Drug Administration (FDA) plan to increase the use of biosimilar drugs and the potential of importing foreign drugs if a drugmaker has exclusivity on an old medication and dramatically increases prices.
