Plan to End Drug Rebates Adds Protections for Insurers - (The Wall Street Journal via NewsPoints Desk)

  • The Trump administration said the US government would implement a risk-sharing scheme to reimburse health insurers for financial losses resulting from a proposed ban on certain pharmaceutical-industry rebates in Medicare, reported The Wall Street Journal.

  • According to the news source, the administration's move to backstop losses could prevent premiums from rising significantly, while making taxpayers responsible for a greater portion of cost overruns in Medicare’s prescription-drug program.

  • Specifically, the rule would halt billions of dollars in discounts that drugmakers give insurers and companies such as CVS Health and UnitedHealth that administer Medicare prescription plans.

  • Health and Human Services Secretary Alex Azar has suggested that it would prompt manufacturers to pass discounts directly on to consumers and bring new transparency to prescription drug markets.

  • A spokesman for Cigna commented that the proposed rebate rule was a "one-size-fits-all solution" and that the government should instead allow insurers "more flexibility to innovate and create tailored solutions for beneficiaries."

  • Federal spending is projected to rise by $196.1 billion over a decade as a result of the rebate-rule change, according to estimates by the CMS Office of the Actuary, while drugmakers would save $39.8 billion as mandatory discounts they provide during the so-called "donut hole" gap in individuals' Medicare coverage would be reduced.

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