The Trump administration has withdrawn its proposal to eliminate drug rebates in Medicare and Medicaid plans, striking another significant blow to its broader plans to curb rising drug costs.
The proposed HHS rule, first unveiled in January, would have excluded the rebates drugmakers pay to pharmacy benefit managers from protections from anti-kickback laws.
Instead, the agency would have created new safe harbor protections to protect certain PBM service fees and another protection for certain price reductions made at the point of sale.
But the changes met significant pushback from insurers and hospitals who worried the proposal wouldn't force drugmakers to lower prices and would likely see higher profit margins after the January 2020 implementation.
The Congressional Budget Office said Medicare spending would jump by $187 billion and Medicaid by $7 billion over the decade after the rule went into effect.
Axios first reported the rule's demise.
The news comes just days after a federal judge blocked the administration's rule requiring drugmakers to publish list prices in advertisements. U.S. District Judge Amit Mehta said HHS didn't have the authority to require drugmakers to publish list prices, a blow to the administration's strategy to curb pharmaceutical costs.