The Trump administration is pressing forward with the president’s campaign promise to combat high drug prices, but it isn’t necessarily going after the manufacturers that he described last year as “getting away with murder.”
Instead, Health and Human Services Department officials have recently touted their push for more price transparency with a focus on rebates negotiated between “middlemen”— insurers and pharmacy-benefit managers, third-party organizations that manage drug benefits—and drug manufacturers.
“This thicket of negotiated discounts makes it impossible to recognize and reward value, and too often generates profits for middlemen rather than savings for patients,” said HHS Secretary Alex Azar in prepared remarks last week at an America’s Health Insurance Plans event.
His comments came a day after Food and Drug Administration Commissioner Scott Gottlieb blasted the practice of rebates and the opaqueness of the system at the same conference. “Currently, PBMs and insurers profit from the spread between wholesale acquisition cost and the actual rebated price,” said Gottlieb. “These rebates can amount to tens or hundreds of million dollars in annual PBM revenues.”
One insurance company has already started moving in the Trump administration’s direction. UnitedHealthcare last week announced it will be passing savings from rebates directly to consumers, a move that garnered praise from administration officials. The new policy would apply to 7 million consumers, the company says.
Rep. Earl “Buddy” Carter told National Journal that the effort to lower drug prices needs to start with the insurers and pharmacy-benefit managers. “If we look at the middleman, then I think we’ll have a better understanding of where these supposed rebates are going and I think it’ll have a much quicker effect of bringing prescription-drug prices down,” he said.
There is a growing push from patients to adopt the kinds of changes that UnitedHealthcare is pushing, said Dan Mendelson, president of Avalere Health. “United is smart to be erasing this practice, because the more consumers learn about this practice, there is a lot of momentum behind passing on these rebates to individuals at the point of sale,” he said.
He also emphasized that the administration is trying to increase competition as a way to bring down drug prices. “I think the thing they are not doing is setting prices, or going in with more prescriptive price controls,” Mendelson said. “I think what they’re proposing is smart, because there is a strong consensus that increasing the competitiveness of these markets will improve matters for consumers.”
Mendelson said UnitedHealthcare’s policy is similar to what the administration wants for Medicare’s prescription-drug-benefit program, or Part D. As part of a proposed rule released in November, the Centers for Medicare and Medicaid Services solicited comments on a policy that would pass on some manufacturer rebates and all pharmacy price concessions to the beneficiary at the point of sale.
The proposal drew praise from a large bipartisan group of House lawmakers. “Senior citizens should not be forced to pay cost-sharing on artificially inflated drug prices at the pharmacy counter that quickly force them into the coverage gap, therefore this proposal is vital in reducing costs for our vulnerable seniors and ensuring they have access to the medications they need,” they wrote to the agency in January.
But Rep. Morgan Griffith, who led the lawmakers in sending the letter, told National Journal that UnitedHealthcare’s decision is not on par with the Part D proposal because it’s like “the fox watching the henhouse.”
He said lawmakers on the Energy and Commerce Committee learned through a hearing about how insurers and pharmacy-benefit managers have encouraged manufacturers in some circumstances to raise the price of a drug to get a bigger rebate.
“I don’t know that I can say that is something they should be congratulated for,” he said. “Because what they’ve in effect done is they’ve raised the prices to a certain extent so that we found … in some cases, the consumer’s better off to say, ‘Forget my insurance that’s supposed to be taking care of me,’ go directly to the pharmacist and say, ‘I don’t have insurance, how much is it going to cost?’ and it’s cheaper than the price that’s allegedly discounted if they use their insurance.”
While insurers and PBMs are getting a lot of attention, Azar indicated that the drug manufacturers have a role to play as well, but warned against a level of transparency that he said would not actually assist consumers and instead may lead to price increases.
“We’re hoping for transparency as much as possible from all players in the system as the information is relevant to patients, especially at the point of sale,” he said at a briefing with reporters last week. “There is a balance, though, especially when one is talking about commercial arrangements and negotiated information behind the scenes, to ensure that transparency doesn’t lead to anticompetitive actions or behaviors that in fact could drive up costs.”
What We're Following See More »
"White House chief of staff John Kelly has tapped Chris Liddell, a senior White House aide and former executive at Microsoft and General Motors, as his deputy." Prior to his appointment, Kelly had just one deputy: "Joe Hagin, who focuses on the day-to-day operations" in the White House. "Up until now, the White House had not named a deputy chief of staff for policy, though several aides, including [DHS Secretary Kirstjen] Nielsen, had informally played that role."
The Supreme Court on Monday "rejected a plea to undertake a historic reassessment of the constitutionality of the death penalty nationwide. The court denied certiorari in Hidalgo v. Arizona, which challenged the constitutionality of that state’s death penalty statute but also attacked capital punishment generally 'in light of contemporary standards of decency.'" The Court did not act on another case, Evans v. Mississippi, which would have prompted a broader review of the death penalty. "Justice Stephen Breyer, joined by Justices Ruth Bader Ginsburg, Sonia Sotomayor and Elena Kagan issued a separate statement agreeing that the Hidalgo case should be denied because the record in the case was not fully developed, but hoping a future case would be a better platform for reviewing capital punishment."
Saudi Crown Prince Mohammad Bin Salman begins his two-week visit to the U.S. this week, meeting with "political and business leaders in Washington, New York, Silicon Valley and elsewhere" in an effort to shore up financial support for his government and rehabilitate its image abroad. "The crown prince employed a similar public relations strategy on a three-day visit to the UK," where he met with "an array of British business and defense leaders." Bin Salman has been widely criticized for his alleged political chicanery in the Gulf, and for Saudi Arabia's devastating air campaign in neighboring Yemen.
A fourth package bomb injured two people in Austin on Sunday evening, "which the police chief says was caused by a tripwire and showed 'a different level of skill' than the package bombs used in the three prior attacks." The police are still searching for the perpetrator, and have warned residents to not pick up or approach suspicious packages. Previous explosions, which the police believe are connected, have killed two and wounded several others.
White House Lawyer Ty Cobb said that President Trump not considering firing special counsel Robert Mueller. Speculation swirled after Trump attacked the investigation on Twitter, and called out Mueller directly for the first time. “In response to media speculation and related questions being posed to the Administration," Cobb said, "...the President is not considering or discussing the firing of the Special Counsel, Robert Mueller." Several members of Congress, "including some top Republicans, warned Trump to not even think about terminating Mueller."