Azar says HHS is still committed to addressing PBM rebates

Alex Azar testifying
Department of Health and Human Services Secretary Alex Azar discussed pharmacy benefit manager rebates in a speech Thursday. (House Energy and Commerce Committee)

Department of Health and Human Services Secretary Alex Azar said Thursday that any approach to bring down drug prices that doesn't tackle pharmacy benefit manager rebates “will not deliver the results” the Trump administration seeks. 

The HHS chief said in a speech at the National Business Group on Health’s Business Health Agenda that anyone who supports the role rebates play in increasing list prices opposes greater transparency and lower out-of-pocket costs for patients. 

“We know that rebates aren’t lowering patients’ out-of-pocket costs, because we know patients have to spend through their deductibles based on list price without rebates helping them at all,” Azar said


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The speech added to the conversation about PBMs and rebates in Washington, D.C., this week, just days after executives at five major pharmacy benefit managers—including the three that dominate the market—testified before a Senate committee on the pharmaceutical supply chain

RELATED: PBMs, drugmakers both to blame for rising insulin prices, legislators say at hearing 

The comment period for the HHS’ rule that would eliminate legal protections for PBM rebates in Medicare Part D and Medicaid also ended this week. Azar indicated that the agency is moving ahead with the plan.  

He noted that the Centers for Medicare & Medicaid Services issued guidance (PDF) late last week aimed at easing the transition for Part D plans. CMS will create a two-year demonstration in Part D beginning in 2020, should the rule be finalized, that would adjust the program’s risk corridors in tandem. 

CMS Administrator Seema Verma wrote in the guidance that Part D plans should submit their 2020 bids to reflect anti-kickback protections in place at that time, not how they could change in the future. 

Azar said this plan will allow HHS to move forward with eliminating the safe harbors for rebates “without unnecessary risk of premium hikes.” 

“We’re taking these steps because we know the benefits of a change would be huge,” he said. 

RELATED: Senators press PBMs to clarify Azar’s ‘extremely disturbing’ drug pricing allegations 

Azar also repeated calls for these reforms to extend to the commercial insurance market. HHS believes that if it finalizes the rule for government payers, there will be ripple effects in the private market, but the secretary has pushed legislators to make these changes formal. 

A bill that would do so was introduced last month by Sen. Mike Braun, R-Indiana. Azar called on the employers at the conference to push for those changes as well. 

Ending rebates in the employer market is even more crucial to addressing drug prices, Azar said, as there are not the legal requirements for rebates to be passed back to consumers, whether directly or through lower premiums or cost sharing. 

“Clearly, change is coming to prescription drug markets,” he said. 

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