HHS Secretary Alex Azar suggests eliminating drug rebates

In a hearing Tuesday with the US Senate Committee on Health, Education, Labor and Pensions, Health and Human Services Secretary Alex Azar hinted that the administration could pursue to restructure or eliminate rebates on drug list prices. Azar stated that removing rebates from Medicare Part D is "something that is and should be on the table," adding that the administration believes it has the authority to revise the statute that permits rebates.  

"We may need to move toward a system without rebates, where [pharmacy benefit managers] and drug companies just negotiate fixed-price contracts," remarked Azar, continuing "such a system's incentives, detached from artificial list prices, would likely serve patients far better."  

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The news comes after US President Donald Trump unveiled a plan last month seeking to lower drug prices in the US. Azar, who had previously promised "bold action" concerning drug pricing, later disclosed that the administration was considering a proposal that would expand the ability of Medicare to negotiate drug prices.  

Meanwhile, several lawmakers on Tuesday questioned Azar regarding recent remarks by Trump that drugmakers would soon announce "massive" cuts to the list prices of drugs. Azar stated that several companies were "looking at" price cuts but were talking with pharmacy benefit managers to ensure "they're not discriminated for lowering prices" by being removed from formularies. Azar has hinted that he plans to take action if drugmakers do not voluntarily agree to price reductions.

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