HHS on Friday delayed a rule that would bar pharmacy go-betweens from keeping rebates paid by drugmakers under Medicare Part D.
The policy was set to take effect on Friday but is now scheduled to begin Mar. 22. Still, the Biden administration may not move forward with the plan following a memo last week from White House Chief of Staff Ron Klain directing agencies to freeze new regulations that haven't taken effect. The Pharmaceutical Care Management Association sued earlier this month to block the rule from taking effect, saying it threatens pharmacy benefit managers with "significant criminal and civil liability" for negotiating rebates with drug companies.
The rule would replace the current system, which bases rebates on a drug's list price, with fixed administrative fees. The Trump administration hoped the regulation would lower drug prices by cutting into the profits of pharmacy benefit managers, companies that process and pay prescription drug claims for employers and health plans. It revived the rule last fall after abandoning it in 2019.
The Government Accountability Office last month said the Trump administration didn't follow the rules when it published the rule without a 60-day delay in its effective date.
Drugmakers claim they must keep prices high because pharmacy benefit managers demand large discounts. They backed the policy change, in part, because it would insulate patients from the sticker prices of some expensive drugs. But insurers and hospitals worried the proposal wouldn't convince drugmakers to lower prices and could boost their profit margins after it took effect.
The Congressional Budget Office had said Medicare spending would jump by $187 billion and Medicaid by $7 billion over the decade after the rule was implemented. Even the most favorable cost analyses of the rebate rule estimated that it would increase Medicare beneficiaries' premiums in all scenarios. That's because the rule would take the money insurers currently use to keep premiums low across all beneficiaries and use it to lower out-of-pocket costs for a smaller subset of individuals taking drugs that have high rebates.
