White House withdraws rebate plan to ease drug costs

WASHINGTON — President Trump is withdrawing a plan to ease the financial bite of costly medications for people on Medicare by letting them receive rebates that drugmakers now pay to insurers and middlemen, the White House said Thursday.

The oncehighly promoted plan from Health and Human Services Secretary Alex Azar ran into opposition within the White House. The pushback grew after the nonpartisan Congressional Budget Office estimated the plan would have little impact on manufacturer prices and cost Medicare $177 billion over 10 years by leading to higher premiums subsidized by taxpayers.

White House spokesman Judd Deere said the proposal to create the rebate program was withdrawn “based on careful analysis and thorough consideration.” It was not immediately clear whether that meant the end of the debate on rebates because other proposals on the same issue could surface on Capitol Hill, where lawmakers are working with the administration on drug cost legislation.

Deere said Trump is not backing away from his promise to lower drug prices, and the administration is setting its sights on bipartisan legislation in Congress. Various bills would cap drug copays for people with Medicare. Patients taking very expensive medications for cancer, rheumatoid arthritis and other conditions can now face copays that rival a mortgage payment.

The administration’s aboutface was the second setback in a week for the president’s drive to lower drug prices.

A federal judge in Washington, D.C., ruled on Monday that the administration did not have legal authority to require drugmakers to disclose list prices in their TV ads that were supposed to have started this week. But GOP Sen. Chuck Grassley, chairman of the Senate Finance Committee, and Illinois Sen. Dick Durbin, the chamber’s secondranking Democrat, are pushing legislation that would grant the government such powers.

Thursday’s reversal on rebates appeared to be a win for insurers, employers, and middlemen called “pharmacy benefit managers” who administer prescription drug plans for large blocks of insured patients.

Shares of several big companies that manage prescription benefits started climbing early in the day.