COA Applauds HHS for Taking Strong Step Towards Ending Secretive Rebate System

February 1, 2019

COA Commends Trump Administration for Plan to Lower Drug Costs for Patients

The Community Oncology Alliance (COA) applauds President Donald Trump, Health and Human Services Secretary Alex Azar, Inspector General Daniel Levinson, and HHS staff for the just released, ambitious proposal to overhaul the nation’s secretive drug rebate system. This move will lower drug prices for all Americans by finally ensuring that patients receive the benefit of negotiated drug discounts, not plan sponsors and pharmacy benefit managers (PBM).

For decades, corporate PBM middlemen have pocketed billions of dollars in record profits from the shadowy network of rebates they negotiate with manufacturers, while patients with cancer and other serious diseases have continued to bear the burden of high drug costs. This rebate system has served to drive drug list prices higher and higher, benefited PBM middlemen, and fueled out-of-pocket drug costs for patients. As HHS noted in the plan’s announcement, “nearly every drug company taking a January 2019 price increase announced that all or nearly all of the increase was being paid to PBMs or insurers as rebates.”

The Administration’s proposal will directly lower drug prices and out-of-pocket costs by ensuring that patients, not PBM middlemen, receive the benefit of the discounts from manufacturers. This plan is extremely good news for patients who will now directly benefit from discounts and lower drug prices.

Today’s announcement is a concrete step the Administration has taken to reduce the incredibly negative influence of PBM middlemen. As it stands today, physicians report that PBM middlemen in Part D reduce care choices, drive up costs, increase administrative burdens, and interfere with physician-patient decision making. Over the last three years, COA has documented real-life horror stories from practices and physicians about patients battling cancer who have suffered at the hands of PBMs due to delayed coverage decisions, denial of needed treatments, impenetrable bureaucracies, and failure to receive medications in a timely manner.

COA encourages the Administration to next fix murky direct and indirect remuneration fees – so called DIR fees – that PBMs extort from pharmacy providers and that further drive up list prices of drugs. DIR Fees, which have no basis in regulation or law, artificially inflate the costs paid by Medicare beneficiaries for prescription drugs, pushing them into the Medicare Part D “donut hole” faster, fueling rising drug prices, and ultimately adding to the burden on taxpayers.

COA is actively working to address the high cost of cancer drugs and services. As the frontline providers of care for the majority of Americans battling cancer, independent community oncologists are uniquely positioned to give insight into the impact of federal policymaking on patients, providers, and the overall health care system.