Jul 28, 2020

Reception of Misguided Reboot Focuses on Premium Increases, Cost to Taxpayers, Support from Drug Companies and Poison Pill Provision

On Friday, the administration announced the revival of a policy known as the Rebate Rule via executive order. The Rebate Rule was previously withdrawn by the White House amid concerns that the measure would hike premiums on American seniors by at least 25 percent, cost taxpayers more than $200 billion, hand Big Pharma a more than $100 billion bailout and do little to lower prescription drug prices.

The coverage of the Rebate Rule’s reintroduction focused on the projected premium increases, cost to taxpayers, bailout for Big Pharma, support from drug companies — and how a ‘poison pill’ caveat makes the measure unworkable.

Here are highlights from the media reception of the rebooted Rebate Rule:

Press Coverage of the Rebate Rule

Associated Press:
“…The White House last year withdrew an earlier version of the proposal, after the Congressional Budget Office estimated it would cost taxpayers $177 billion over 10 years.” (Ricardo Alonso-Zaldivar, With No New Law To Curb Drug Costs, Trump Tries Own Changes, Associated Press, 07/24/20)

The Wall Street Journal:
“…The Department of Health and Human Services last summer dropped a proposed regulation to eliminate rebates from Medicare after government actuaries projected it would increase premiums and out-of-pocket costs for most participants. The Congressional Budget Office also forecast the rule would increase federal spending by $177 billion between 2020 and 2029.” (The Wall Street Journal Editorial Board, Trump’s Drug Price Panic, The Wall Street Journal, 07/24/20)

The Washington Post:
“…Trump killed the rule last year, which is favored by the drug industry, after initially embracing it when he saw projections showing it would raise Medicare premiums for many seniors.” (Yasmeen Abutaleb & Josh Dawsey, Trump Signs Executive Orders Aimed At Lowering Drug Prices In Largely Symbolic Move, The Washington Post, 07/24/20)

“…The pharmaceutical industry supported the plan, which was one reason for its initial demise. Trump was also apparently concerned in the past that the policy would raise insurance premiums. Lawmakers criticized the rule for its massive price tag too. It would cost taxpayers $177 billion over a decade, according to the Congressional Budget Office.” (Shira Stein, Riley Griffin & Jacquie Lee, Trump Ties Medicare Drug Cost to Rates Paid by Other Nations, Bloomberg, 07/24/20)

Modern Healthcare:
“…[T]he executive order includes a provision that could prove to be a poison pill. The White House last summer pulled the regulation after it was determined to be one of the most expensive ever promulgated — the Congressional Budget Office estimated the price tag at $177 billion from 2020-2029. It was also estimated to raise Medicare beneficiaries’ premiums. But the executive order says the rebate rule can’t be advanced unless the HHS secretary gave public confirmation that the rule would not raise premiums, taxpayer spending, or out-of-pocket costs. (Rachel Cohrs & Michael Brady, Trump Issues Drug Pricing Executive Orders On 340B, Outpatient Drug Pay, Modern Healthcare, 07/24/20)

STAT News:
“…[I]t remains to be seen if the rebate rule will ever truly be implemented: The executive order released by White House includes a caveat that the plan cannot be implemented if it will raise premiums. The government’s own actuaries have estimated that the rebate rule would increase premiums by up to 25 percent.” (Nicholas Florko & Lev Facher, Trump Administration Unveils Executive Orders To Curb Drug Prices — But They Come With Caveats, STAT News, 07/24/20)

Inside Health Policy:
“The Trump administration on Friday announced four executive orders that, with one exception, attempt to reboot proposals that have been languishing and that, in one case, was outright withdrawn by administration officials…the [Rebate Rule] order includes a caveat that might make the rebate ban impossible — it requires that a ban not increase premiums. When the administration killed the rebate policy last time, it did so because it would raise premiums.” (Ariel Cohen, John Wilkerson & Michelle M. Stein, Four Drug Pricing Executive Orders Mostly Reboot Stalled Policies, Inside Health Policy, 07/24/20)

“…The rebate order comes with a caveat that any plan cannot increase seniors’ premiums, the unworkable problem that led the administration to kill its original rebate rule last year.” (Sarah Owermohle, Adam Cancryn & Susannah Luthi, Trump Signs Limited Drug Pricing Orders After Last-Minute Debate, POLITICO, 07/24/20)

“…However, it’s very much up in the air whether any action would be taken to overhaul the rebate system. The executive order’s wording suggests that ‘prior to taking any action’ regarding changes to the rebate system the Secretary of ‘HHS must confirm that such a policy wouldn’t lead to increases … in premiums for Medicare beneficiaries.’ But, that’s precisely the issue PBMs and payers have repeatedly raised over the years, as they claim that gutting rebates would lead to increases in premiums.” (Joshua Cohen, Trump’s Executive Orders On Drug Pricing Contain Caveats And Limitations, Forbes, 07/25/20)

Reporter Reception of the Rule

Bertha Coombs, CNBC:
“So how would this work? In 2019 the CBO found that changing the rebate rule would increase government spending by $175 billion, and would result in increased premiums.” (@berthacoombs, Twitter, 07/24/20)

Adam Cancryn, POLITICO:
“The rebate rule as proposed increased federal spending and raised seniors’ premiums – exactly the reasons it wasn’t finalized in 2019. Without major changes to the policy, the rebate rule EO effectively kills the rebate rule.” (@adamcancryn, Twitter, 07/24/20)

Nicholas Florko, STAT News:
“Executive orders are in and the rebate executive order says the secretary should only crack down on rebates if it won’t raise premiums. That seems impossible given the government’s own experts have said it would raise premiums.” (@NicholasFlorko, Twitter, 07/24/20)

Mary Ellen McIntire, CQ Roll Call:
“Pretty big caveat to the rebate executive order in the EO that just came through. Government experts previously said the rebate rule would raise premiums.” (@MelMcIntire, Twitter, 07/24/20)

Robert King, FierceHealthcare:
“Executive order text is in. The order for the rebate rule only includes a requirement that HHS confirm the rule wont’ raise Medicare premiums or federal spending, issues that scuttled the rebate rule.” (@rking_19, Twitter, 07/24/20)

Learn more about the Rebate Rule that would increase premiums on Medicare Part D beneficiaries, cost taxpayers $200 billion and hand Big Pharma a $100 billion bailout HERE