Trump administration proposes changes to ‘cockamamie system’
WASHINGTON » The Trump administration on Thursday proposed bringing transparency to one of the most secretive aspects of drug pricing by ending the widespread practice of rebates to middlemen — an effort to reduce what consumers pay for prescription medicine.
Under draft rules announced by Health and Human Services Secretary Alex Azar, drug manufacturers would be allowed to offer discounted prices directly to consumers but would no longer be able to give rebates to the middlemen, known as pharmacy benefit managers.
The rules, if they become final next year, would apply directly to older Americans who buy medicine under Medicare drug plans and low-income people with Medicaid managed-care plans.
Some drug policy experts praised the proposal as a strong first step, even though the changes would pertain just to the government’s two largest health insurance programs. As with many other health policies that began with those public programs and filtered into the private sector, they predicted that the government insurance plans would set a strong example for private insurers.
“It’s a cockamamie system that’s never made any sense,’’ said David Balto, who was a policy chief for the Federal Trade Commission under the Clinton administration. “When it comes to the PBM claims of saving money through their rebate schemes, everyone’s going to realize the emperor wears no clothes.’’
President Donald Trump and Azar have made constraining drug prices a central piece of their health- care agenda. Since issuing a blueprint last spring, they have insisted that rebates — which they portray as “hidden kickbacks” — are a big problem in controlling what people pay for medicine. Most of the health care rules the administration has sought to change have gone through.
HHS officials said that drug prices after rebates tend to be one- quarter to 30 percent lower than the list price but that many consumers pay the list amount as part of their insurance deductibles and other copayments.