2:44 PM
May 10, 2019
 |  BC Extra  |  Politics & Policy

White House, Congress considering killing Part D rebate rule, creating spending cap

White House and congressional staff from both parties are discussing legislation that would create an out-of-pocket cap on drug costs for Medicare Part D beneficiaries, individuals briefed on the discussions told BioCentury.

The spending cap would be coupled with eliminating or deferring implementation of the Trump administration’s proposal to prohibit rebates to PBMs and health plans in Medicare Part D.

The trade-off has emerged from negotiations between Joe Grogan, director of the Domestic Policy Council in the White House, and Wendell Primus, senior policy adviser on budget and health issues to House Speaker Nancy Pelosi (D-Calif.).

Pelosi and other Democrats have attacked the rebate rule, arguing that it would increase Part D premiums, impose large costs on taxpayers and benefit drug companies (see “Killing Part D Rebates”).

The Trump administration’s plan to eliminate rebates would cost the federal government $177 billion over a decade, according to a Congressional Budget Office estimate (see Trump Administration Rebate Proposal Would Not Reduce List Prices, CBO Predicts”).

Grogan, a deficit hawk, has been critical of the cost of the rebate rule, a source who has spoken with him about it told BioCentury.

Grogan’s willingness to kill or defer the rebate rule is creating tensions within the Trump administration, especially with HHS Secretary Alex Azar, who has made eliminating rebates a centerpiece of his initiatives to reduce drug prices.

The dispute between Grogan and Azar over rebates is likely to be resolved by President Donald Trump.

Azar also opposes other elements of the drug pricing deal Grogan has discussed with Primus, including granting CMS power to negotiate prices of some Part D Medicare drugs. Negotiation would be limited to drugs for which there is no competition, and may be limited to the top 100 drugs with the highest cost to Medicare. If CMS and a manufacturer could not come to agreement, the price could be set by binding arbitration.

Any deal reached between Pelosi and Grogan would face hurdles. Senate and House committee chairs would have to be persuaded, as would Trump.

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