The Pharmacy Benefit Podcast: “The Rebate Rule”

On a new episode of The Pharmacy Benefit podcast, I was joined by April Alexander, General Counsel and Vice President of State Regulatory Affairs at PCMA, and Mark Newsom, the Principal and Founder of Health Evaluations.

This conversation comes at a critical time as the Biden administration awaits confirmation of its nominees for key roles at the Department of Health and Human Services (HHS). Once confirmed and in their jobs, those officials will make critical decisions about the nation’s health care policy.

Already, though, the Administration agreed to delay the Medicare rebate rule’s effective date, which will also delay the significantly higher premiums for Medicare beneficiaries that would result if the rebate rule were implemented. Indeed, Centers for Medicare & Medicaid Services’ (CMS’) Office of the Actuary and Congressional Budget Office analyses suggest the rule would increase Medicare Part D premiums by 25 percent and add $170 billion or more in Part D program costs paid by taxpayers. Far from helping beneficiaries, the rule would make it even more difficult to negotiate lower prescription costs with drug manufacturers.

Time is a factor. Medicare Part D plan bids are submitted to CMS in the spring / summer for the following year, and beneficiaries are choosing from plans and offerings developed far in advance. For example, beginning in fall 2021, many PBMs will begin negotiating with drug manufacturers on brand drug costs so they can then determine what savings they can deliver, their Part D benefits and bids for 2023. CMS also needs to know the rule’s status by the fall so that regulators can begin their lengthy rulemaking process that reflects the rule, which will eat an enormous amount of staff time.

The cleanest path forward would be for Congress to repeal the rebate rule. April, Mark, and I discussed this and more. Listen to our conversation here.

JC Scott is the President & CEO of the Pharmaceutical Care Management Association (PCMA), the association representing America’s pharmacy benefit managers

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