PhRMA and BIO Offer Support of HHS Rebate Proposal, While Insurers Balk at the Plan

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Stephen Ubl, president and chief executive officer of Pharmaceutical Research and Manufacturers of America (PhRMA) applauded the steps taken by the Trump administration to reform the pharmaceutical drug rebate system in order to lower patients’ out-of-pocket costs.

In a brief statement issued after Department of Health and Human Services Secretary Alex Azar floated a proposal that would encourage manufacturers to pass discounts directly to patients instead of insurers, Ubl noted that the current health care system in the United States “results in patients often paying cost-sharing based on the list price, regardless of the discount their insurer receives.” Ubl said that lawmakers and industry representatives need to ensure that the $150 billion in negotiated rebates and discounts are used to lower costs for patients at the pharmacy. Ubl noted that 2018 research supports the idea that sharing negotiated discounts at the pharmacy could save seniors with diabetes more than $350 annually.

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“This proposal would also help to fix the misaligned incentives in the system that currently result in insurers and pharmacy benefit managers (PBMs) favoring medicines with high list prices,” Ubl said. “These types of reforms will especially help patients with chronic diseases, such as diabetes patients who rely on insulin, who are often not benefitting from significant rebates and discounts.”

Ubl said PhRMA, the lobbying organization for the pharmaceutical industry, will provide comments to the administration after it has reviewed Azar’s proposed rule.

Ubl was not the only industry representative to offer some support for lowering costs for patients. Jim Greenwood, president and CEO of Biotechnology Innovation Organization (BIO), said the trade organization “strongly supports” the goal of Azar’s proposed rule to lower out-of-pocket costs for consumers. Greenwood said each year, drugmakers provide “tens of billions of dollars in rebates to help expand affordable access to prescription medicines.” Greenwood said that BIO supports the notion that the rebates offered by companies that develop and market pharmaceutical medicines to insurers and middlemen should be used to lower out-of-pocket costs of consumers.

“But far too often these rebates are not passed along to patients and are instead used to pad the profits of middlemen. The current system creates perverse incentives that are driving the affordability crisis many patients face today,” Greenwood said in a statement.

Greenwood said BIO will review the details of the proposed rule, but as of now, the organization is “encouraged” that the administration is moving forward with a market-based reform to lower costs for patients.

“We urge the administration to adopt a final rule that leads to a fairer system and helps provide more patients affordable access to the medicines they need,” Greenwood said.

While the heads of the two powerful pharma organizations showed their support to the HHS proposal, at least before the nuts and bolts have been made public, the insurers and PBMs are far more hesitant to offer support. A spokesperson for Express Scripts told a BioPharma Dive sister publication that the rebates “are just one funding mechanism” in the services that the provider offers. Spokesperson Brian Henry said the measure is a bit short-sighted when only looking at one component.

Health insurers were also quick to denounce Azar’s proposal, BioPharma Dive reported. According to the report, America's Health Insurance Plans called the proposal “well-intentioned but misguided.” AHIP said the rebate savings already go directly to the consumers and save them money.

"From the start, the focus on rebates has been a distraction from the real issue — the problem is the price. Manufacturers have complete control over how drug prices are set. Already this year, more than three dozen drug makers have raised their prices on hundreds of medications,” AHIP CEO Matt Eyles said in a statement to BioPharma Dive.

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