HHS Takes Aim at ‘Backdoor’ Rebates

February 4, 2019

The federal government has proposed a new rule—aimed at reducing prescription drug prices and making the market more transparent—that could dramatically change the way pharmaceuticals are sold. The rule, introduced January 31 by Health and Human Services Secretary Alex Azar and Inspector General Daniel Levinson, would scale back existing legal protections that allow manufacturers to offer rebates to PBMs. Instead, they’d be encouraged to offer rebates directly to consumers.

“Every day, Americans—particularly our seniors—pay more than they need to for their prescription drugs because of a hidden system of kickbacks to middlemen. President Trump is proposing to end this era of backdoor deals in the drug industry, bring real transparency to drug markets, and deliver savings directly to patients when they walk into the pharmacy,” said Secretary Azar in a news release.

According to the release, prescription drug rebates today amount to, on average, 26 to 30 percent of a drug’s list price. The proposal would allow—but not require—pharmacies and insurers to lower drug prices and pass on those savings to the patient.

Read the HHS news release.