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Rebate elimination won’t lower list prices | POLITICO

CBO PREDICTS LIST PRICES WON’T DROP UNDER REBATE RULE — Drug manufacturers aren’t likely to lower list prices if the Trump administration finalizes its proposal to eliminate manufacturer rebates to pharmacy benefits managers in Medicare and Medicaid, a new CBO analysis concludes. The administration has argued that eliminating rebates should lead to lower list prices, but drug companies have generally been hesitant to commit to this on the record, particularly if rebates are still allowed in private sector health plans.

Instead, CBO expects that drug companies would negotiate upfront discounts with PBMs that would be about 15 percent smaller than their current rebate commitments. PBMs would use those discounts to determine what they pay pharmacies, and because pharmacies would buy drugs based on list prices, manufacturers would give them a “chargeback” to make up the difference.

Why this complicated system? It lets the drug industry keep list prices high in other parts of the U.S. market, Kaiser Family Foundation’s senior VP Larry Levitt explained.

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Rebate elimination won’t lower list prices – POLITICO.

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