Lawsuits are almost guaranteed for both rules, so their ways of implementing them remain unclear, especially as Trump’s days in office dwindle.
The Trump administration released two controversial drug policies on Friday, one that could lower profit margins for drug companies and one that would allow them to make smaller payments to their partners.
Both moves culminate in four years of the president’s threat to companies in the drug supply chain to lower prices or bow to regulations. The move could give the new Biden administration massive policies that it can either enact, amend, or in some way dismantle.
A guideline replaces statutory shields for current discounts from drug manufacturers to middlemen in the pharmacy with protective measures for new, fixed agreements that detach the payment amount from the price of the drug. The policy also stipulates that discounts go directly to customers at the pharmacy counter. Middlemen, also known as Pharmacy Benefit Managers, help insurers organize their drug insurance lists and determine which products will receive preferential treatment.
The other regulation binds the reimbursement of drugs that are administered in medical practices to the federal government in order to lower the prices paid in other countries. Medicines administered by doctors, often for serious illnesses such as cancer, are usually expensive.
Lawsuits are almost guaranteed for both rules, so their ways of implementing them remain unclear. The judges have stopped other Trump drug policies, including a rule requiring drug companies to include pricing information in advertisements.
The S&P 500 drug index barely moved around the announcement, rising just 0 on a day that Pfizer Inc. announced that its vaccine would be the first to be submitted to the Food and Drug Administration for emergency approval, 08% at 3:11 p.m. in New York stores.
The final discount rule favors drug companies whose leaders say that by eliminating the current discounts, they can lower drug prices. However, there is no guarantee of it.
The discount rule applies to drugs sold in Medicare Part D, the senior outpatient drug program. However, the head of the Department of Health and Human Services said the change could spill over into private plans last year.
The foreign drug price rule would be implemented over several years, with half of the country initially participating through a federal demonstration project.
Rocky Road ahead
The foreign pricing rule could lower profit margins for drug manufacturers and doctors. Both rules change the business arrangements for pharmacy intermediaries significantly.
The pharmaceutical industry is “very much against” foreign price adjustments, said Theresa Carnegie, health policy attorney at Mintz Levin Cohn Ferris Glovsky and Popeo.
“They are very willing to bring lawsuits,” she said, noting that the foreign drug price rule may be more maligned by influential groups than the discount rule. Medical groups are also likely to complain about foreign drug pricing policies because it also affects their practices, she said.
Pharmacy middlemen groups have already promised to complain about the rule that removes traditional drug discounts.
“The government has no evidence that branded drug manufacturers will voluntarily lower their prices,” the Pharmaceutical Care Management Association, which represents drug intermediaries known as Pharmacy Benefit Managers, said in a statement.
Drug companies say these discounts force them to keep prices high because middlemen charge high payments. Middlemen argue that the rule will increase premiums. They also claim the rule will increase taxpayer costs – a rebuttal backed by a review by the Congressional Budget Office which found the policy would cost taxpayers $ 177 billion over a decade.