MACPAC wants Part D rule to protect Medicaid supplemental rebates

Congressional Medicaid advisers on Friday questioned whether the Trump administration should include Medicaid in its major proposal to ban middleman rebates from Medicare Part D.

Medicaid has been an overlooked component of the proposed rule, whose chief goal is to lower out-of-pocket costs for people with Medicare prescription drug plans. Medicaid is a different animal: people with Medicaid insurance pay only a nominal amount at the drug counter whereas Medicare beneficiaries can be on the hook for high copays.

Still, Medicaid could see downstream effects from the regulation if it is finalized as suggested, given the administration's proposed overhaul of the rebate system.

Members of the Medicaid and CHIP Payment and Access Commission (MACPAC) advisory panel want to make sure HHS safeguards the supplemental rebates that manufacturers offer Medicaid. Since these rebates aren't defined in statute, the panel said the department should specifically protect them under safe harbor laws.

But given the proposed rule's potential complications for Medicaid's supplemental rebate structure, commissioners warned the administration might be complicating matters by including Medicaid in a regulation that doesn't actually touch the program's enrollees.

"In my head I'm calling into question, Why is Medicaid even in this, if the point is to get money to Medicare beneficiaries?" commissioner Melanie Bella said. "The situation is quite different here. The easiest thing to me would be to say, Take Medicaid out. We're talking about analysis and assumptions, but we're kind of overcomplicating it. I think the core question is, What are you trying to achieve by putting Medicaid in it?"

Commissioner William Scanlon agreed with Bella that keeping Medicaid out of the rule entirely would be the "most clean solution."

But he said since the proposal's overarching goal is to return dollars to Medicare enrollees, MACPAC should focus on protecting Medicaid's supplemental rebates.

Commissioner Darin Gordon joined other skeptics of the rule and argued that it's far from clear or guaranteed that pharmaceutical companies will lower their list prices or pass the rebates directly to patients at point of sale, as envisioned by the administration. If manufacturers don't lower list prices, Gordon said, costs could rise for Medicaid.

"I'm concerned it's actually going to have a larger negative impact on states than we're anticipating, Gordon said. "It's hard to tell."

Lawmakers on the Senate Finance Committee last week asked seven CEOs of top manufacturers if their companies would lower their list prices if pharmacy benefit manager rebates went away. They received only two commitments to lower prices — and those commitments came with the caveat that the PBM rebates would have to be banned in the commercial insurance as well as in Medicare.

Comments on the proposed rule are due April 1, and MACPAC will ask HHS to protect the program's supplemental rebates in a formal letter.