Azar: Drug rebates' 'days are numbered' despite rule setback 

Woman paying for a prescription at a pharmacy
HHS Secretary Alex Azar discussed the death of the agency's rebate rule with reporters on Wednesday. (Getty/Tom Merton)

Though the Trump administration has withdrawn its plan to eliminate legal protections for drug rebates in Medicare Part D, Health and Human Services (HHS) Secretary Alex Azar said Thursday that the White House has not changed its stance on the practice. 

What ultimately killed the rule was the growing body of evidence—including analysis from the Congressional Budget Office—suggesting that it would lead to higher Part D premiums for seniors, a risk that made President Donald Trump and other officials skittish, the HHS chief told reporters. “Rebates’ days are numbered,” Azar said, “but we’re not going to take any action that could run the risk of seniors’ premiums going up.” 

The act of even introducing the rule as proposal created ripple effects in the industry, Azar said, as evidenced by a number of commercial insurers moving toward pass-through or direct-to-consumer discounts. 

Free Daily Newsletter

Like this story? Subscribe to FierceHealthcare!

The healthcare sector remains in flux as policy, regulation, technology and trends shape the market. FierceHealthcare subscribers rely on our suite of newsletters as their must-read source for the latest news, analysis and data impacting their world. Sign up today to get healthcare news and updates delivered to your inbox and read on the go.

RELATED: Trump administration tosses drug rebate rule 

UnitedHealthcare and CVS Health headline the list of insurers that are aiming to move away from the drug rebate structure and toward discounts offered to members at the pharmacy counter.

The rebate rule was one of personal interest to Azar, who was its greatest champion within the White House. Ian Spatz, senior adviser at Manatt Health, told FierceHealthcare that the looming 2020 election, and how increasing premiums on seniors could play in that situation, likely played a role in the rule's demine.

"I think that the sort of politcial problems with the proposal just weighed it down too much and outweighed the strong personal commitment to it by Secretary Azar," Spatz said.

In addition, Azar said that Congress could still take action on drug rebates, and that legislators would have more tools at their disposal to potentially avoid adverse effects like higher premiums. 

Azar said that administration officials were well aware in January when they proposed the rule that it could impact premiums. As such, he said he “totally supports” the president’s decision to pull the plug on the plan. 

“That was a known risk in our proposal—that is why we put this rule out for public comment,” he said. 

RELATED: Pharma CEOs go after familiar target in drug hearings—insurers  

Spatz said congressional intervention is the next logical step, and that the role of rebates would likely be swept into broader discussion about the future of Part D. He echoed Azar is saying that Congress may have a better toolkit for avoiding the potential adverse impacts of eliminating rebates.

"I think that’s the right place for us to think of where this discussion is going to go," Spatz said.

Industry groups representing pharmacy benefit managers and insurers cheered the rule’s demise on Wednesday, though the Pharmaceutical Research and Manufacturers of America, the pharma industry trade group, called it a “blow” to seniors. 

“Of all the policies proposed in Washington right now, this was the only proposal that would provide immediate savings at the pharmacy counter, instead of only saving the government or insurance companies money,” PhRMA said in a statement.

The decision to toss the rebate rule is the second major setback this week for the administration on its ambitious plans to address drug pricing. On Monday evening, a federal judge blocked an HHS rule that would force pharmaceutical companies to list their prices in television ads. 

Despite that ruling, Azar said the administration still supports state initiatives and congressional efforts to put prices in ads. Drug companies “ought to be ashamed” of their pricing, which is why they’re opposing greater transparency so strenuously, he said. 

“I have been very clear from the outset, as has the president, that there’s not a silver bullet to deal with the problem of drug pricing,” Azar said. 

Suggested Articles

The Centers for Medicare & Medicaid Services released the MA plan star ratings for the 2020 plan year on Friday.

A New Orleans-based genetic testing company will pay $42.6 million to resolve False Claims Act and kickback allegations.

A three-judge appellate panel didn't appear convinced that Medicaid work requirements meet the law's objectives of providing coverage.