The Administration has done important work to help lower drug prices. But the recent proposed rule on drug rebates – which would weaken the ability of Pharmacy Benefit Managers (PBMs) to negotiate lower prescription drug prices for patients – is a step in the wrong direction.

What the Rebate Rule Actually Does:

Instead of finding real solutions to lower out-of-control drug prices, this plan would be the newest Big Pharma bailout – giving billions more to big drug makers.

These are the facts:

• Premiums will go up 25 percent for seniors and people with disabilities. Premiums for Part D plans will go up 19 percent in 2020 alone – and 25 percent from 2020-2029. Seniors rely on Medicare Part D for their prescription drug coverage – there is no alternative. Higher premiums for 43 million Americans is not a solution to out-of-control drug prices.
• Federal spending – paid by hardworking taxpayers – will increase by nearly $200 billion. The federal government will spend $196 billion more to cover seniors and those with disabilities under Part D. And states and the federal government will pay $2 billion more in Medicaid for prescription drugs. That’s a huge additional burden on hardworking Americans.
• Savings that should go to seniors will instead fund a more than $100 billion bailout for Big Pharma. That’s more money going right into Big Pharma’s pockets.

The truth is – we need market-based solutions that focus on actually lowering drug prices by holding Big Pharma accountable and driving more competition. Learn more here.

What the Government is Saying:

The CBO budget projections concluded the impact of the Rule would include:

• Nearly $200 Billion in Additional Federal Spending. That total includes an estimated $177 billion price tag for Medicare and Medicaid under the initially proposed rule, plus an estimated $10 billion cost for the loss-assumption program announced by CMS on April 5, 2019. (Congressional Budget Office, Incorporating The Effects Of The Proposed Rule On Safe Harbors For Pharmaceutical Rebates In CBO’s Budget Projections, 5/2/19)
• Increased Premiums for Part D Beneficiaries. CBO found that if “rebates were no longer paid directly to plans, Part D premiums would rise.” (Congressional Budget Office, Incorporating The Effects Of The Proposed Rule On Safe Harbors For Pharmaceutical Rebates In CBO’s Budget Projections, 5/2/19)
• Added Costs and Premium Hikes to Remake the System. The CBO also concluded “that no current system could both meet the proposed rule’s standards” to facilitate up-front price discounts on prescription drugs. CBO estimates the cost of remaking the system to accommodate volume-based discounts would increase premiums for Part D beneficiaries by an additional percent. (Congressional Budget Office, Incorporating The Effects Of The Proposed Rule On Safe Harbors For Pharmaceutical Rebates In CBO’s Budget Projections, 5/2/19)
• An additional 15 percent pay-out to Big Pharma on the backs of seniors. (Congressional Budget Office, Incorporating The Effects Of The Proposed Rule On Safe Harbors For Pharmaceutical Rebates In CBO’s Budget Projections, 5/2/19)

The CBO analysis bolsters findings from the Centers for Medicare and Medicaid Services (CMS) which determined that the Rebate Rule would result in:

• A 25 Percent Hike In Premiums For Medicare Part D Recipients. (Center For Medicare & Medicaid Services Office Of The Actuary, Memo On Proposed Safe Harbor Regulation, 1/31/19)
• $197 Billion In Additional Federal Spending. (Center For Medicare & Medicaid Services Office Of The Actuary, Memo On Proposed Safe Harbor Regulation, 1/31/19)
• A Massive Bailout For Big Pharma In The Form Of $137 Billion In Increased Drug Spending. (Center For Medicare & Medicaid Services Office Of The Actuary, Memo On Proposed Safe Harbor Regulation, 1/31/19)

What Seniors/Consumers are Saying:

A national survey that found an overwhelming 84 percent of Americans want policymakers to focus on policies that crack down on Big Pharma, rather than measures targeting rebates. The survey, commissioned by CSRxP and conducted by Morning Consult, also shows Americans put blame for rising prescription drug prices at the feet of Big Pharma, believe pharmacy benefit managers (PBMs) play a key role in the system and oppose the Administration’s proposed Rebate Rule:

Americans Want Policymakers to Focus on Holding Big Pharma Accountable

• 68 Points: By a whopping 68-point margin, 84 to 16 percent, surveyed Americans believe policymakers in Washington should focus on cracking down on the anti-competitive and price gouging tactics of Big Pharma rather than on eliminating rebates.
• 92 Percent: America’s seniors, in particular, believe policymakers should focus on Big Pharma rather than rebates, by a massive margin of 92 to 8 percent. 

Americans Oppose the Administration’s Proposed Rebate Rule

• 28-Points: Americans informed about the Rebate Rule and its projected impacts oppose the measure margin of 45 to 17 percent, a 28-point spread.
• 88 Percent: A convincing 88 percent of survey respondents express concern with premium hikes for Medicare Part D beneficiaries projected under the Rule, including 60 percent who expressed being “very concerned.”
• More Than 85 Percent: More than 85 percent of Americans nationwide express concern (and more than 50 percent expressed being very concerned) with Big Pharma’s support of the Rule, the projected boost to Big Pharma’s bottom line, the projected cost to taxpayers and the lack of guarantee the Rule will lower drug prices.

A Morning Consult summary of the survey can be found HERE.

Not only does the Rebate Rule reward Big Pharma for its anti-competitive tactics, there is nothing in the rule that guarantees that drug manufacturers will lower prices by the full amount of existing rebates. Big Pharma’s track record proves that given the ability to raise prices, they will do just that.

We urge the administration to focus on those market-based solutions and abandon the Rebate Rule in light of the mounting evidence of its negative impact on seniors and taxpayers.