WASHINGTON -- The top U.S. health official asked Congress on Friday to pass its new prescription drug discount plan and provide it to all patients, not just those covered by government programs like Medicare.
The plan would take now-hidden rebates among industry players like drug companies and insurers and channel them directly to consumers when they go to pay for their medications.
Patients with high drug copays stand to benefit from the proposal, while people who take no prescription drugs, or who rely on generics mainly, would probably pay somewhat more, since premiums are expected to rise.
A day after unveiling the plan as a proposed regulation, Health and Human Services Secretary Alex Azar raised the stakes by calling on Congress to make it law and broaden it to include people covered by employer health insurance, not just Medicare and Medicaid beneficiaries.
"Congress has an opportunity to follow through on their calls for transparency ... by passing our proposal into law immediately and extending it into the commercial drug market," Azar said in a speech at the Bipartisan Policy Center think tank.
Democrats say the administration's plan doesn't go far enough because it still leaves drug companies free to set high list prices. They say drug pricing is like a black box, and it's impossible to tell if prices reflect actual costs or if companies are charging what they think the market will bear.
House Speaker Nancy Pelosi, D-Calif., says she's also worried that the plan would raise premiums. The Health and Human Services Department acknowledges Medicare prescription premiums would go up $3 to $5 a month.
Nonetheless, the administration's proposal appears to be in the mix as Congress gears up to craft legislation addressing prescription drug costs.
The complex plan would work by doing away with an exemption from federal anti-kickback rules that currently allows drugmakers, insurers and middlemen called pharmacy benefit managers to negotiate rebates among themselves.
Drug companies pay rebates to make sure their medications are covered by insurance plans that are the intermediaries between them and patients. The Health and Human Services Department says hidden rebates can amount to up to 30 percent of a drug's list price. Insurers say they use the money from rebates to hold down premiums for all consumers.
Under the plan, the current anti-kickback exemption for industry rebates would be replaced with a new one for discounts offered directly to consumers.
Azar said the idea would reshape the drug pricing system, shifting it away from hidden rebates to upfront discounts, creating pressure on drugmakers to keep prices down. The proposal was co-written with the Health and Human Services inspector general's office.
Experts say it will take time to sort out all the potential consequences.
Peter Bach, director of the Center for Health Policy and Outcomes at New York's Memorial Sloan Kettering Cancer Center, said the current system of rebates harms patients who take costly drugs with high copays.
Patients' cost sharing is often based on list prices, not the cost of the drug after rebates.
"Simply put, those on no medications at all will just see their premiums go up and see no savings because they don't take any medicine," said Bach. "Those on generics only may be essentially in this category [as well].
"But those on expensive medications ... they will see savings in total," he added. More than half a million people filled at least $50,000 in prescriptions in 2014, according to an Express Scripts report.
Insurers and pharmacy benefit managers like Express Scripts and CVS oppose the administration plan, saying it will undercut their ability to bargain with drugmakers for lower prices.
Drugmakers have applauded the administration's action.
Business on 02/02/2019