Trump administration proposes rolling back drug rebates

A pharmacy technician works at a desk with drugs sitting on a shelf in the foreground.

A new rule would lower drug costs at the pharmacy counter. Photo: George Frey/Getty Images

HHS and the Office of Inspector General formally released a long-awaited proposal Thursday that would eliminate drug price reductions, called rebates, in Medicare and Medicaid. Instead, those rebates offered by drug companies to insurance middlemen would lower what people pay at the pharmacy counter.

The big picture: The Trump administration has signaled for months it wanted to overhaul the drug rebate system. The pharmaceutical industry praised the proposal, which would go into effect Jan. 1, 2020, because it wouldn’t limit how drugs are priced, but insurers and pharmacy benefit managers have already warned they would raise premiums to offset any loss of rebates.

DRUG PRICES
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Illustration: Lazaro Gamio/Axios

Over the first two years, President Trump could get away with largely extending his campaign bluster: Build a “big, beautiful wall” and get Mexico to pay for it, withdraw from foreign entanglements, deliver “incredible” healthcare, slash drug prices and fundamentally change the U.S.-China relationship.

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Author: Josep