Proposed Rule

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America's pharmacy benefit managers (PBMs) work every day to ensure that more than 266 million Americans have affordable access to prescription drugs. These companies are the only entities in the drug supply chain whose mission is to lower cost the of prescription drugs.

The Administration is proposing to eliminate the use of a key tool that PBMs use to drive savings for consumers and patients - rebates from drug manufacturers to PBMs in the Medicare Part D and Medicaid managed care programs.

Unfortunately, the proposal being considered by the Administration will not lead to lower prescription drug costs but would substantially increase premiums for Medicare beneficiaries.

PBMs negotiate rebates with drug manufacturers to keep prescription drugs accessible and affordable for consumers, patients and plan sponsors.  The savings that PBMs negotiate from drug manufacturers are passed on to plan sponsors to lower Medicare Part D premiums, reduce the amount consumers pay at the pharmacy counter, and enhance benefits.

• Medicare Part D premiums increase up to 25%.
  All Medicare Part D beneficiaries will pay more in premiums. The Administration estimates that premiums could go up by 25% -- the largest average premium increase in the history of Part D.
  
  
• Taxpayers costs will increase up to $400 billion over the next ten years.   Analysts at the Congressional Budget Office, Centers for Medicare & Medicaid Services, and Avalere Health all agree the proposed rule would come at a tremendous cost to American taxpayers, with a price tag ranging from nearly $200 billion to more than $400 billion.  This could be one of the costliest regulations in U.S. history.  

• Medicare Part D could be destabilized.
  Because Part D enrollment is voluntary, a 25 percent base premium increase could destabilize the successful and popular program if higher premiums cause healthier beneficiaries to drop coverage or never enroll at all.
  
  
• The rule does nothing to address prescription drug list prices.
  The administration has continuously stated its goal to lower list prices for prescription drugs, and yet the proposed rule “intends” and speculates that manufacturers might do so. The fact is the manufacturers—and only manufacturers—set drug prices.  Manufacturers already could lower their prescription drug list prices and don't, and manufacturers continue to raise prices on drugs used in Medicare Part B, a program which does not involve PBM-negotiated rebates. If manufacturers do not lower their list prices (again, there is no requirement in the rule that they do so), HHS readily admits that the rule will result in large increases in both Federal subsidies and beneficiary premiums, with the only benefit accruing to manufacturer profits. 

• The Administration is not sure what the implications of the rule are and had to get six actuarial analyses done in order to find one that supports U.S. Department of Health and Human Services' (HHS) contention that drug prices will be lower without rebates. 

This proposal should not be finalized. There are many better ways to reduce the cost of prescription drugs for our seniors, those with disabilities, and taxpayers that do not cost so much nor provide drugmakers with increased profits.