Pharmacy association files suit to block Trump administration’s rebate rule
The association says the rebate rule will increase Medicare Part D premiums as well as significantly increase costs for taxpayers.
A pharmaceutical industry association on Tuesday filed a legal challenge to the Trump Administration’s prescription drug rebate rule, which would replace the current drug rebate model with one that passes savings directly on to consumers.
The lawsuit by the Pharmaceutical Care Management Association (PCMA), filed in the district court for the District of Columbia, asks the court to set aside the rebate rule under the Administrative Procedure Act. The lawsuit also includes a request for a declaration from the court that federal law protects the rebates that Office of Inspector General, U.S. Department of Health and Human Services, is seeking to remove from the discount safe harbor regulation.
Related: Winners and losers in Trump’s plan to kill drug rebates
“The Trump Administration’s last-minute decision to finalize the rebate rule will drastically increase Medicare Part D premiums for seniors while significantly increasing costs for taxpayers,” said JC Scott, PCMA president and CEO. The PCMA cited several reasons for taking legal action:
- Part D premiums will increase dramatically. Although about 10% of beneficiaries would save under the rebate rule, the other 90 percent would pay more. If premiums increase as much as the 25 percent suggested by the Office of the Actuary, the average monthly premium in 2020 would have increased from $38.13 to $47.66, with a proportionate increase in 2021 and future years. This would mark the largest average premium increase in the history of the program. Further, because Part D is voluntary, it could destabilize the program if higher premiums cause healthier beneficiaries to drop coverage or never sign up.
- Rebates lower Medicare costs: ”Reports issued by the Government Accountability Office and HHS Office of Inspector General confirm that PBM-negotiated rebates are passed through and used to lower prescription drug costs in the Medicare program.”
- The rebate rule is one of most expensive regulations in history: ”According to the Congressional Budget Office, the administration’s rebate rule would cost taxpayers $177 billion over 10 years. The administration’s own actuaries also estimated the cost to be as high as $196 billion over 10 years, and Avalere Health estimated the proposed rule will cost taxpayers $400 billion over that time.”
- Medicare Part D beneficiaries are concerned about proposed changes to drug plans: ”Senior registered voters enrolled in Medicare Part D will be less likely to support the reelection of their members of Congress and presidential candidates if those elected officials back proposals eliminating prescription drug negotiations and price concessions that would result in Part D premium increases.”
- The rule does nothing to address prescription drug list prices: ”The administration has continually stated its goal to lower list prices for prescription drugs, and yet the rule only speculated that drug manufacturers might do so. The fact is the manufacturers — and only manufacturers — set drug prices.”
“The haphazard process to finalize a rule that had already been withdrawn circumvented the proper rulemaking process and imposes an effective date that utterly fails to take account of the CMS timeline for issuing implementing guidance, creating chaos for the upcoming plan year,” Scott said. “In addition, the agency failed to consider the significant impacts on beneficiaries and government costs that were articulated in thousands of public comments opposing the rule when it was originally proposed. The rebate rule cannot be implemented and should be invalidated.”
America’s Health Insurance Plans (AHIP) also issued a statement in support of the legal challenge.
“Drug prices are out of control because Big Pharma alone sets and controls drug prices,” said AHIP president and CEO Matt Eyles. “For years, health insurance providers and our PBM partners have negotiated discounts and rebates to reduce drug prices, saving Americans billions of dollars in health care costs.
“We support invalidation of this rule and urge policymakers, instead, to support much-needed and deserved relief to America’s seniors.”
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