We Must Reduce Drug Prices with Policies that Work, Not More Regulation

Last week, the Department of Health and Human Services moved to end “backdoor rebates” in Medicare Part D and Medicaid Managed Care Organizations. Doing so would change the legal protection parameters for rebates between drug manufacturers, insurers, and pharmacy benefit managers.

Critics of these rebates say that pharmacy benefit managers drive up the cost of drugs by negotiating larger and larger rebates, but fail to pass these savings onto patients. Cracking down on backdoor rebates will significantly improve affordability for patients by effectively mandating that the beneficiary benefit from them at the pharmacy counter.

The proposal was fully supported by Finance Committee Chairman Chuck Grassley (R-IA), who said it demonstrates that the administration is “serious” about “lowering health care costs for patients & taking tough steps needed for transparency and accountability.”

Chairman Grassley’s comments were reassuring just days after the Senate Finance Committee’s first hearing of the year which was focused on drug pricing in America. In the hearing, Grassley along with Ranking Member Ron Wyden (D-OR) lambasted the pharmaceutical industry for high costs and attempted to frame the situation as a crisis.

Read more of this Forbes op-ed by Doug Schoen by clicking here.