Sep 13, 2019

Inspector General Finds Negotiated Rebates Slowed Medicare Part D Price Hikes, Saved Program $8 Billion on Drug Costs

Washington, D.C. – The Campaign for Sustainable Rx Pricing (CSRxP) issued a statement today following the release of a new report from the U.S. Department of Health & Human Services (HHS) Office of Inspector General on rebates in the Medicare Part D program. The report found rebates negotiated by pharmacy benefit managers (PBMs) slowed price increases on 1,510 brand-name prescription drugs by 15 percent from 2011 to 2015 — undercutting a common refrain from Big Pharma blaming rebates for pushing drug prices higher.

“This report provides the latest, incontrovertible evidence that the culprit for the crisis of rising prescription drug prices are the brand name manufacturers who alone set and control the list price,” said CSRxP executive director Lauren Aronson.

“Big Pharma can no longer hide behind its scapegoating of PBMs and must be held accountable for its egregious pricing practices,” Aronson continued. “This report should help policymakers see clearly through Big Pharma’s blame game and press forward with bipartisan, market-based solutions to crack down on the anti-competitive tactics and price-gouging of brand name drug makers.”

The report from the HHS Inspector General analyzed 1,510 brand name drugs with rebates in the Part D program from 2011 to 2015. The report found:

  • 15 Percent: Negotiated rebates slowed Part D reimbursement for brand name drugs by 15 percent over the five years analyzed by the report. “Total Part D reimbursement for brand-name drugs increased by 19 percent from 2011 to 2015, versus a 4-percent increase in rebate-adjusted reimbursement for these drugs over the 5 years reviewed.”
  • $8 Billion: The 15 percent savings achieved by negotiated rebates kept the growth of Part D reimbursements for these drugs to $2 billion, instead of $10 billion without rebates – resulting in $8 billion in savings for the program. “Total Part D rebate-adjusted reimbursement increased from $46 billion to $48 billion … “At the same time, total Part D reimbursement, not adjusted by rebates, increased from $55 billion to $65 billion over the same 5 years.”
  • 42 Percent: While rebates grew on some drugs, the size of total rebates fell for a significant 42 percent of brand name drugs.
  • 45 Percent: Despite Big Pharma’s blame game casting rebates as a culprit for overall rising prices, the OIG report found that 45 percent of brand name drugs had no rebates at all from 2011-2015.
  • 96 Percent: The report found that Part D reimbursement increased for 96 percent of brand-name drugs reviewed, indicating rising prices, regardless of whether the size of the rebate increased, decreased or remained static.

To read the full HHS OIG report, click here.