Top Republicans concerned over impact of potential Trump drug rule

Two top Republicans are urging the White House to complete a thorough economic analysis before releasing a new policy that could completely upend the way prescription drugs are purchased.

In a letter to Office of Management and Budget (OMB) Director Mick Mulvaney, House Energy and Commerce Committee Chairman Greg Walden (R-Ore.) and Senate Finance Committee Chairman Orrin Hatch (R-Utah) said they want a full analysis of a pending proposed rule regarding prescription drug rebates.

“The publicly available title of the rule indicates that the action contemplated could be significant in scope, with the potential to dramatically change the process by which prescription drugs are purchased within the supply chain,” Walden and Hatch wrote.

Even without knowing the full details of the proposal, the chairmen said the changes “could ripple across the health care sector.”

The proposed rule is part of the administration’s efforts to bring down the costs of prescription drugs. The rule, which is currently under review by the OMB, could remove the legal protection of rebates paid by drug companies to insurers and pharmacy benefit managers.

Generally, a pharmaceutical company pays a rebate so a pharmacy benefit manager — the third-party administrators of prescription drug programs — will make its product the only one of its kind on the list approved for reimbursement or so that the co-pay for its product is less than the co-pay of competing products.

Trump administration officials have argued that if the federal anti-kickback law that protects such rebates were changed, it could help increase competition and make drugs more affordable.

Critics argue the savings from the rebates aren’t passed on to consumers. Insurers say they spread around the savings from discounts to lower overall premiums.

The change could have an enormous impact on the pharmacy benefit manager industry.

“Removing safe harbor protections for rebates used to purchase prescription drugs would alter any federal, taxpayer-financed program to which it applies, changing regulations and practices that have been acceptable for decades,” the lawmakers wrote.

Drug companies have engaged in an extensive lobbying campaign aimed at passing the blame for high drug prices on to insurers and pharmacy benefit managers, while pharmacy benefit managers continue to direct blame at drug companies.