FDA Commissioner Scott Gottlieb on Thursday said the Trump administration is considering revisiting a law that allows pharmaceutical companies to pay rebates to pharmacy benefit managers (PBMs) in exchange for limiting competition for the drugmakers' products.
According to Modern Healthcare, under federal law, lawmakers are permitted to pay certain rebates to PBMs and, in exchange, the PBMs will set the copayments for the drugmakers' products lower than competing drugs' copays or will limit coverage for certain products to those manufactured by the drugmakers. The savings PBMs incur from the rebates are not always passed along to consumers, Modern Healthcare reports.
Gottlieb says Trump admin is eyeing changes
Gottlieb during a Food and Drug Law Institute conference on Thursday suggested that the administration is considering whether to change federal policies to no longer allow the practice. He asked, "What if we took on this system directly, by having the federal government re-examine the current safe harbor for drug rebates under the Anti-Kickback Statute?" Gottlieb added, "Such a step could help restore some semblance of reality to the relationship between list and negotiated prices, and thereby boost affordability and competition."
Gottlieb also said the federal government needs to encourage competition in the prescription drug market by altering policies that allow drugmakers to take advantage of certain exclusivity agreements and by closing loopholes that drugmakers use to delay the entry of generic drugs into the market.
According to Reuters, President Trump this week is scheduled to unveil policies intended to curb rising prescription drug prices.
Ross Muken and Michael Newshel, analysts for Evercore ISI, in a research note wrote that Gottlieb's remarks "increase … uncertainty" in the prescription drug market "and show a willingness by the administration to get more aggressive" on prescription drug prices. They continued, "The government could threaten fines or other legal action to force changes in the rebate system that could potentially pressure the gross-to-spread and impact economics in the drug channel."
A spokesperson for the Alliance for Transparent & Affordable Prescriptions said, "PBMs have long been diverting these savings to their own bottom line." The spokesperson added, "It's time for the government to look anew at whether that amounts to an inappropriate inducement."
Thomas Sobol, an attorney at Hagens Berman Sobol Shapiro, said, "Discouraging large pay-for-placement rebating will go far in bringing greater transparency, and lower list prices, to consumers."
But PBMs say altering the policy could increase prices for consumers, Modern Healthcare reports.
The Pharmaceutical Care Management Association in a statement said, "Getting rid of rebates would leave patients and payers, including Medicaid and Medicare, at the mercy of drug manufacturer pricing strategies. Simply put, the easiest way to lower costs would be for drug companies to lower their prices" (Dickson, Modern Healthcare, 5/3; Beasley, Reuters, 5/3; Swetlitz, STAT News, 5/3).
Just updated: Your cheat sheets for understanding health care's legal landscape
To help you keep up with the ever-changing regulatory environment, we recently updated our cheat sheets on some of the most important—and complicated—legal landmarks to include a brand new one-pager on the new tax law.
Check out the cheat sheets now for everything you need to know about MACRA, the Affordable Care Act, antitrust laws, fraud and abuse prevention measures, HIPAA, and the two-midnight rule.