New CBO Analysis of Administration’s Proposed Rebate Rule Confirms Higher Premiums and Federal Spending

WASHINGTON, May 2, 2019 /PRNewswire/ -- Pharmaceutical Care Management Association (PCMA) President and CEO JC Scott issued the following statement on the Congressional Budget Office's (CBO) scoring of the Health and Human Services Office of Inspector General's proposed rule revising the safe harbors around prescription drug rebate negotiations in Medicare and Medicaid managed care.

"The CBO analysis confirms that the proposed rule on prescription drug rebates will not achieve the Administration's stated goal of reducing prescription drug prices.

According to the report: 'CBO does not anticipate that manufacturers would make any broader changes in prescription drug prices in response to implementing the proposed rule that would flow through to other federal programs… There would be effects on the larger market only if prescription drug manufacturers changed their list prices…CBO does not expect them to do so.'

CBO agrees with the Centers for Medicare & Medicaid's Office of the Actuary that drug manufacturers will withhold 15 percent of the rebate they currently negotiate with PBMs, thus raising overall costs. CBO also found that implementing the proposed rule will lead to higher premiums, resulting in an increase in federal spending in Medicare and Medicaid by $177 billion from 2020 to 2029.

In addition, the CBO analysis confirms that a new chargeback system is costly to implement, disruptive, and increases premiums. If the Administration proceeds with a final rule, rather than create an entirely new system, point-of-sale savings should be administered through PBMs, who are uniquely positioned to implement them smoothly and seamlessly."

PCMA is the national association representing America's pharmacy benefit managers (PBMs). PBMs administer prescription drug plans for more than 266 million Americans who have health insurance from a variety of sponsors including: commercial health plans, self-insured employer plans, union plans, Medicare Part D plans, the Federal Employees Health Benefits Program (FEHBP), state government employee plans, Medicaid plans, and others.

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SOURCE Pharmaceutical Care Management Association