Trump Administration Proposes Rebate Plan

Numerous Americans in the country are struggling to make ends meet. With the prices of drugs and prescription medicine constantly on the rise, citizens of the country are paying high prices of pharmaceuticals out of their own pocket. Following such unfortunate circumstances, the Trump administration calls for Congress to ban backdoor deals and rebates that give middlemen in Medicaid and Medicare billions in rebates.

Alex Azar of the United States Health and Human Services proposed a bill which aims to limit the rebates given out the third-party individuals managing Medicare and Medicaid by drug manufacturers. Under this proposed bill, pharmaceutical benefits managers or middlemen managing insurance benefits are slated to receive a fixed price for including drugs on their insurance plans.

Current Rebate Situation

The current rebate landscape involves health insurance companies working with a pharmacy benefits manager. A pharmacy benefits manager talks with various pharmaceutical companies how they can best market their offerings. In turn, PBMs receive discounts, commonly known in the industry as rebates, and pass these plans onto the insurer and the consumers by giving them more budget-friendly premiums.

In exchange for rebates, PBMs ensure that customers availing of their plans use drugs from their partner companies. According to Anna Edney and Robert Langreth from Bloomberg, PBMs tend to favour high-priced drugs in the industry, particularly when it means more kickback from their partners.

Change in Rebate Landscape

Alex Azar sees this necessary step to eliminate surprising sticker prices for the consumers, aiming to address and end this practice by January 1, 2020, Avik Roy of Forbes reports.

As a result of this program, customers can expect drug prices to be more affordable and accessible, particularly lowering individuals’ out-of-pocket spending.

The transition towards this program comes as no surprise to PMBs, as it has been in the works for the past six months.