“Unintended Windfall Profits” for Drugmakers
The Trump administration is considering a proposed rule that aims to bring some U.S. drug prices in the Medicare program in line with lower prices paid by other countries that negotiate pricing. U.S. Department of Health and Human Services Secretary Alex Azar said on Thursday he and Trump will also work to allow importation of cheaper drugs from other countries, a move drugmakers have opposed.
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The rebate rule, which was in the process of being finalized and would have gone into effect next year, was estimated by the nonpartisan Congressional Budget Office to cost the government $177 billion over the next 10 years. The CBO also said that it was likely that drugmakers would not cut their prices because of the rule.
“Political momentum was building against the 2020 implementation of the CMS proposal to eliminate pharmaceutical rebates in government programs due to the perceived unintended windfall profits that might have accrued to pharmaceutical manufacturers,” JP Morgan analyst Gary Taylor wrote in a research note.
Politico first reported the planned scrapping of the rebate rule on Thursday and the White House confirmed the decision to Reuters.
In recent weeks, Politico and other publications reported that the White House and Azar had disagreed over the rule.
“Based on careful analysis and thorough consideration, the President has decided to withdraw the rebate rule,” White House spokesman Judd Deere said in an emailed statement.
“The Trump administration is encouraged by continuing bipartisan conversations about legislation to reduce outrageous drug costs imposed on the American people,” he said.
(Reporting by Caroline Humer and Michael Erman in New York; Ankur Banerjee, Tamara Mathias and Manojna Maddipatla in Bengaluru; and Bryan Pietsch in Washington D.C. Editing by Steve Orlofsky and Bill Berkrot)