By Lauren Flynn Kelly
With only six months to go until a planned implementation date of Jan. 1, 2020, HHS on July 11 pulled its controversial rule that would have eliminated pharmaceutical manufacturer rebates in Medicare and Medicaid, leaving Part D stakeholders to ponder the Trump administration’s next moves on lowering prescription drug pricing.
Although news of its withdrawal appeared to surprise the investment community, the rebate rule had too much stacked against it to become final, suggests Larry Kocot, a principal at KPMG, LLP. “[T]here were a lot of challenges,” starting with the Congressional Budget Office’s (CBO) estimate that the rule as proposed would have increased federal spending by about $177 billion over the next decade.
Looking ahead to the 2020 elections, President Trump is under the gun to deliver a solution to rising drug prices. While HHS is likely to finalize its proposed International Pricing Index model for Part B drugs, Senate leadership at press time was reportedly considering drug reimportation as well as a proposal that would essentially penalize manufacturers if their drug prices went up by more than a certain inflation factor by making them pay rebates on a percentage of the overage.
At the same time, Congress could advance a House proposal to restructure the Part D benefit such that manufacturers would have to provide more discounts in the catastrophic coverage phase and insurers would have more responsibility for catastrophic spending because of a reduction in federal reinsurance.
Meanwhile, drug reimportation from other countries could be a slippery slope, warns Wayne Miller, R.Ph., vice president for pharmacy solutions with Gorman Health Group. “That’s going to have a short-term effect and pharmaceutical companies will compensate by adjusting their prices,” he predicts.