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The future of the rebate rule: Will policymakers stand with patients?

Stephen J. Ubl   |     August 2, 2021   |   SHARE THIS

Policymakers will soon decide whether to stand by new Medicare changes that will help lower costs for beneficiaries at the pharmacy counter or abandon these changes to fund government programs unrelated to patients and health care.

While Washington debates, many elderly and disabled patients are at a breaking point as high out-of-pocket costs imposed by insurers stand between them and their medicines. I’ve long said the status quo isn’t working for patients. That’s why we support patient-centered changes to modernize Medicare, including by sharing the discounts biopharmaceutical companies currently negotiate with health plans and middlemen like pharmacy benefit managers (PBMs) directly with beneficiaries at the pharmacy counter.

Conversations about lowering drug costs often start with the false premise that drug prices are growing, but in reality net prices for brand medicines actually dropped last year by 2.9% on average. What’s more, according to experts these prices are expected to remain flat or decline over the next five years.

But many patients, including Medicare patients with chronic diseases, don’t always experience the benefit of these lower prices. That’s because when a patient is paying a deductible or other out-of-pocket expense, health plans often force individuals to pay these costs based on the list price of a medicine instead of the lower, discounted price. This unfairly shifts more and more of the financial burden for the cost of life-saving medicines onto vulnerable patients. A recent study found 92% of out-of-pocket spending in Part D is based on the list price of a medicine rather than the lower, discounted price insurers and PBMs receive.

That’s not right and needs to change, which is why we were optimistic when a policy change was finalized last year that would help address this problem. Under the final rebate rule, Medicare Part D patients would directly benefit from the deep discounts health plans receive from biopharmaceutical companies. This would reduce out-of-pocket costs for millions of seniors and patients with disabilities at the pharmacy counter, potentially improving medication adherence and health outcomes. For example, a senior with hepatitis C could save more than $3,000 a year thanks to a rule that would deliver savings straight to consumers.

Voters are in strong support of the rule. One public opinion poll found that 76% of registered voters support the rebate rule. And 82% of Americans support requiring health insurance companies to pass along more of these discounts to patients.

But unfortunately, Washington policymakers may deny seniors these savings by threatening to further delay or even revoke this policy to help pay for other, unrelated government priorities. This cynical move would ignore the concerns of voters and treat Medicare as a piggybank to fund programs that have nothing to do with lowering patients’ drug costs. It seems policymakers are willing to provide a massive giveaway to insurers and middlemen even if it means patients pay more for their medicines.

As we look for ways to improve our health care system and make it more affordable, the policies we consider must pass this test: Do the changes benefit patients? The rule that begins to fix a broken prescription drug rebate system passes this test. The political games Washington is playing with the rule don’t.

Learn more about how we can make the health care system work better for patients at PhRMA.org/BetterWay.

Stephen J. Ubl

Stephen J. Ubl Stephen J. Ubl is president and chief executive officer of PhRMA. Mr. Ubl leads PhRMA’s work preserving and strengthening a health care and economic environment that encourages medical innovation, new drug discovery and access to life-saving medicines. Ubl is recognized around the world as a leading health care advocate and policy expert who collaborates successfully with diverse stakeholder groups – including patient and physician groups, regulators, public and private payers, and global trade organizations – to help ensure timely patient access to innovative treatments and cures.

Topics: Part D, Out-of-Pocket Costs

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