Trump administration proposes lowering drug costs by targeting backdoor rebates and encouraging direct discounts to patients

HHS proposed on Thursday a rule that would reduce prescription drug prices and out-of-pocket costs by calling on manufacturers to pass discounts directly on to patients and increasing transparency to prescription drug markets.

HHS proposed on Thursday a rule that would reduce prescription drug prices and out-of-pocket costs by calling on manufacturers to pass discounts directly on to patients and increasing transparency to prescription drug markets. "Every day, Americans—particularly our seniors—pay more than they need to for their prescription drugs because of a hidden system of kickbacks to middlemen," said HHS Secretary Alex Azar. "President Trump is proposing to end this era of backdoor deals in the drug industry, bring real transparency to drug markets, and deliver savings directly to patients when they walk into the pharmacy." The proposed rule would specifically exclude from safe harbor protection under the Anti-Kickback Statute rebates on prescriptions paid by manufacturers to PBMs, Part D plans, and Medicaid managed care organizations. The rule would establish a new safe harbor for prescription drug discounts provided directly to patients, as well as fixed-fee service arrangements between drug companies and PBMs. According to HHS, "By encouraging negotiated discounts that are reflected in cost-sharing methods like co-insurance, used for many expensive drugs in Medicare Part D, the proposal is projected to provide the greatest benefits to seniors with high drug costs." The proposal also addresses the pressure drug makers cite to provide increasingly larger rebates, providing instead a clear pathway for drug companies to compete to have the lower price and out-of-pocket cost to the patient.