Senators to boost Trump's proposed ban on PBM rebates

Senators are developing a set of bills to support the Trump administration's proposed ban on drug rebates for pharmacy benefit managers.

Now that transparency has become Washington's buzzword for health reform, anti-rebate fervor — backed by pharmaceutical CEOs during last week's Senate Finance Committee grilling — is ratcheting up in both chambers.

"The whole rebate thing just looks kind of — well it's hard to understand how the consumer benefits from that," said Sen. John Cornyn (R-Texas). "They claim that they sort of spread the benefit in terms of insurance cost, but then it's hard to get the facts and see exactly where the money goes. I'd prefer a system that's a little less of a Rubik's Cube and that's a little more straightforward."

Cornyn and Sen. Catherine Cortez Masto (D-Nev.) of the Senate Finance Committee are discussing legislation to push transparency in the rebate system through reporting requirements, according to aides.

In addition, Sen. Bill Cassidy (R-La.), who sits on both the Senate Finance and health committees, has sent 7 to 10 scenarios for reforming the rebate system to the Congressional Budget Office, and the agency is analyzing them now.

And freshman Sen. Mike Braun (R-Ind.) dived headlong into the debate on Tuesday with a proposal to extend the administration's proposed ban to the commercial market. Braun sits on the Senate health committee.

HHS proposed a rule in January would effectively block manufacturer rebates from going to PBMs and redirect them to the patient at point of sale.

Rep. Peter Welch (D-Vt.) of the House Energy and Commerce health panel said Republicans and Democrats could agree the rebate system as a whole and the pharmacy benefit managers who govern it need more transparency.

"There's a lot of concern about PBMs," Welch told reporters Tuesday. "You know, the PBMs are totally obscure, so nobody knows how much the rebates are or what's in the formulary."

PBMs will also be the next target for a Senate Finance Committee probe in a hearing to be held next month, Senate Finance Committee Chair Chuck Grassley (R-Iowa) said.

Grassley told reporters after last week's grilling of top pharmaceutical CEOs that he didn't have any details on rebate-related legislation.

But the issue continues to spur enthusiasm in the upper chamber. Cassidy has characterized the Trump administration's proposed rebate rule as one of the most aggressive proposals.

"Their rebate rule would kick in 2020 — that is aggressive," Cassidy told reporters late last week as he gave the administration an "A" grade for effort on its work on drug pricing. "Eleven months from now, they would do away with rebates. That's incredibly aggressive. If 40% of list prices is related to rebates, imagine suddenly your price comes down by 40%. That is aggressive."

In an Atlantic LIVE event last Wednesday, Senate health committee Chair Lamar Alexander (R-Tenn.) also put his weight behind rebate legislation. Without rebates, the senator said, "we'd see more clearly where the dollars were going, and that could lower prices for patients."

Industry is falling into their expected lanes on the issue, as pharmaceutical manufacturers signal support for a rebate system overhaul and the PBMs brace for a fight.

Last week, two pharmaceutical CEOs told the Senate Finance Committee they would lower their list prices if the Trump administration's proposal were extended to the private market.

"If rebates are removed from the commercial sector, we would definitely lower list prices," AstraZeneca CEO Pascal Soriot said.

But JC Scott, president and CEO of the Pharmaceutical Care Management Association (PCMA) which represents PBMs, criticized Braun's bill just after it was introduced. He defended PBMs as the "primary advocates for consumers in the fight to keep prescription drugs accessible and affordable."

"We are concerned that [Braun's] legislation designed to require a specific use for prescription drug rebates in private-sector health plans would dictate coverage options," Scott said.

He added that the bill "appears to do absolutely nothing to address the root cause of the problem: high list prices that only the drug manufacturers have the power to set."

The law firm Foley Hoag released a white paper early this week arguing that the administration's proposed rule may not pass the savings on to patients as promised if Congress doesn't amend current antitrust laws.

"Absent such careful consideration, including revisions to existing antitrust laws by Congress that have the current practical and legal effect of limiting and/or reducing the amount of upfront discounts offered by manufacturers, any efforts to modify the current rebate system may result in increased net drug prices, in contravention of the goals of the administration and the proposed rule," the white paper said.

In other words, a strategist with a drug pricing advocacy group contended, manufacturers could refuse to pass on the discounts to patients citing a potential antitrust violation.

Meanwhile messaging on the rebate debate has gone beyond Congress and hit the airwaves in a campaign to the public.

The conservative political action committee American Conservative Union released a pro-President Donald Trump ad specifically targeting rebates. The ad praises Trump for "fixing the broken system driving higher prices on prescription drugs.

"He's taking on the insurance middlemen, exposing the secret rebates insurers use to overcharge seniors," the ad says.