HHS pledges to work with insurers on the rebate rule
John O’Brien, senior adviser for drug pricing reform at HHS, made a not-so-insignificant admission during a keynote address at an event last week titled “Operationalizing a World Without Rebates,” despite his best attempts at not making news. Namely, that HHS is considering how it can help insurance plans prepare for the annual Part D bidding cycle.
“We are thinking through all the things that Part D plans would need to know to submit an informed accurate bid if the rule were to be finalized as proposed," O’Brien told the audience.
While O’Brien apologized to the audience minutes earlier for not being able to say much about the Trump administration's sweeping proposal to eliminate drug rebates, I’d argue that O’Brien made some news in his own right.
Stay with me here: The issue of Medicare bids is possibly the biggest rebate-rule-associated headache for insurance companies. It’s so much of an issue that CVS Health wrote to 60 drug makers last week asking them not to raise net prices before bids are due, because doing so would make bidding that much harder and Humana has publicly said it is turning to “game theory” to write its bid.
“The rebate rule anticipates a total reordering of how competition works in the pharmaceutical market, at least as it relates to Part D," Anthony Barrueta, senior vice president of government relations at Kaiser Permanente, told STAT. "No one can even theorize the range of reactions from manufacturers and the market, let alone anticipate them. It is impossible to predict in the next three months how that would shake out if implemented on January 1.”
For the uninitiated: Under the Medicare Part D law, insurance companies must submit bids — detailed estimates of how much it costs them to provide insurance coverage — each June. The average of those bids is used to determine how much the government will pay plans to cover drugs in Medicare. The possibility of rebates going kaput on Jan. 1, 2020, means insurance companies are facing a much more difficult time writing their bids.
“The rebate rule anticipates a total reordering of how competition works in the pharmaceutical market, at least as it relates to Part D," Anthony Barrueta, senior vice president of government relations at Kaiser Permanente, told STAT. "No one can even theorize the range of reactions from manufacturers and the market, let alone anticipate them. It is impossible to predict in the next three months how that would shake out if implemented on January 1.”
For the uninitiated: Under the Medicare Part D law, insurance companies must submit bids — detailed estimates of how much it costs them to provide insurance coverage — each June. The average of those bids is used to determine how much the government will pay plans to cover drugs in Medicare. The possibility of rebates going kaput on Jan. 1, 2020, means insurance companies are facing a much more difficult time writing their bids.
Exactly how HHS will help plans write their bids is unclear, the concern is sure to factor large into insurers’ comments on the rebate rule, which are due April 8.
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