White House kills drug rebate proposal, healthcare stocks rally premarket

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White House kills drug rebate proposal, healthcare stocks rally premarket

Both price disclosure and the rebate idea were part of a strategy on drug costs that Trump announced at the White House amid much fanfare a year ago.

The rule would have excluded rebates from safe harbor protections that now shelter drug makers' rebates from penalties under the federal Anti-Kickback Statute and would have formed new safe harbor protections for discounts offered directly to patients, as well as fixed-fee service arrangements between drug makers and PBMs.

The proposed rule was one that the pharmaceutical industry supported, but the PBM and insurance industry fiercely opposed.

"Based on careful analysis and thorough consideration, the President has chose to withdraw the rebate rule", said Judd Deere, a White House spokesman. And legislators, including House Speaker Nany Pelosi, are pushing for new laws to allow the government to negotiate drug prices directly with manufacturers.

Rebates had become a popular target of criticism in Washington after drug companies lobbied aggressively to cast them as the reason for high prices. "Any solution should start with addressing drug prices". After mostly languishing this year, shares of companies that operate large pharmacy-benefit managers rallied, with CVS Health Corp. rising 7% to $59.23 at 9:35 a.m.in NY, while UnitedHealth Group Inc. advanced 3% to $254.98.

The Trump administration has withdrawn its proposal to block rebates and discounts given by drug makers to pharmacy benefit managers (PBMs), Part D plans, and Medicaid managed care organizations. The pushback grew after the nonpartisan Congressional Budget Office estimated the plan would have little impact on manufacturer prices and cost Medicare $177 billion over 10 years by leading to higher premiums subsidized by taxpayers. Drugmakers prefer that to other approaches lawmakers are considering.

A White House spokesperson said in a statement obtained by Politico the administration will "consider using any and all tools to ensure that prescription drug costs will continue to decline". Ron Wyden of OR, are trying for a compromise centered on lowering drug costs for government programs such as Medicare and Medicaid. Those include "inflation rebates" that drugmakers would be pay directly to Medicare if they raise prices beyond a yet-to-be-determined measure.

The White House first floated the idea of ending the rebates past year as part of a drug pricing "blueprint" aimed at bringing down costs.

Labor Department data indicate that something different may be happening to drug prices. The White House credits Trump for that change, but independent experts say the trend isn't totally clear yet.

The rebate rule would have forced companies like Cigna and CVS to either forgo the discounts or pass them onto Medicare patients enrolled in their health insurance plans and drug plans.

But congressional analysts concluded that drug companies were unlikely to lower list prices across the board in response to the plan. Analysts also questioned how quickly and smoothly the program could have been rolled out.

The analysts did say that seniors who can not afford their copays now would be clear winners. Meanwhile, insurers would raise premiums to compensate for the loss of rebates. The move could have upended a complex system that influences tens of billions of dollars of pharmaceutical spending.

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