The lobby group for pharmacy benefit managers argues in a new report the HHS proposal to eliminate prescription drug rebates for some managed Medicare and Medicaid plans is "poorly conceived" and would result in higher premiums and increased federal spending.
The report, prepared by economic policy consulting firm Matrix Global Advisors and released by the Pharmaceutical Care Management Association (PCMA), finds fault with the HHS impact analysis of the proposal and says that analysis does not back up claims from the department that rebates drive up drug spending. The report also predicts the rule would impact the industry more negatively than HHS estimates because of increased market consolidation.
However, Fitch Ratings forecast on Thursday that the proposal likely wouldn't affect margins or profits for payers, drug companies and distributors over the long term. "Any disruption caused by changing drug contract pricing based on list prices (gross prices) to a system based on net prices (including discounts, rebates, chargebacks), either voluntarily or by law, is expected to be manageable for manufacturers, drug distributors, PBMs and insurers," it reads.
The HHS Office of Inspector General proposed the rule in February that would restrict drug manufacturer rebates to PBMs in Medicare Part D and Medicaid managed care organizations. Instead, the rebates would be moved to point-of-sale discounts for beneficiaries.
HHS Secretary Alex Azar expects the plan would lead in savings for beneficiaries. However, the PCMA report dismissed that stance and charged that the effects would stretch "across the entire pharmaceutical supply chain, adversely affecting federal healthcare programs and taxpayers and significantly redistributing costs across beneficiaries."
It echoes concerns from payers, which have increasingly purchased PBMs to bring the function in-house. But not all in healthcare oppose the change. A white paper, commissioned by Pharmaceutical Research and Manufacturers of America, the drugmaker lobby, suggested the proposal would improve "competitive incentives" in Part D.
The author of the PCMA report, Matrix Global Advisors CEO Alex Brill, said in a statement that the proposal wouldn't contain costs for patients, but would instead "increase revenues and reduce costs for drugmakers." He also disputed HHS' claim that PBM drug rebates are connected to higher list prices. Brill suggested HHS modify the proposal for PBMs to "continue to be able to negotiate for lower drug prices for consumers and be empowered to help administer any new system."
The latest analysis comes with only days left for the public to weight in on the proposal. Comments are due Monday.
On Friday, CMS issued some guidance regarding Part D bids. Ultimately, if there is a change to the rules for 2020, "CMS will conduct a demonstration that would test an efficient transition for beneficiaries and plans," the guidance stated.
CMS said it has received questions about how plans should factor in the possible safe harbor rule change into their bids for 2020. The agency clarified that plans should submit bids based on the laws in place when the bids are due.
The analysis also comes as the spotlight intensifies on PBMs. Following complaints about the rising cost of insulin, Express Scripts promised this week to cap out-of-pocket insulin costs after negotiating with drug manufacturers to provide greater discounts. The discounts will allow for lower copays at the point of sale.
Meanwhile, PBM executives will appear before the Senate Finance Committee on Tuesday to discuss increased drug pricing. Cigna, CVS Health, Humana, OptumRx and Prime Therapeutics officials are scheduled to appear before the committee.