Pharmacy benefit management (PBM)

The complicated politics of Trump's rebate rule

HHS Sec Alex Azar and President Trump
Health and Human Services Sec. Alex Azar with President Trump. Photo: Alex Wong/Getty Images

The Trump administration's proposal to shake up how money moves through the prescription drug supply chain in Medicare works best if it's also extended to the commercial market, supporters say.

Yes, but: The politics of the proposal will almost certainly prevent this from happening. Opponents say the change is a handout to pharmaceutical companies and would increase premiums, and analyses of the proposal — including the government's — support this argument.

Health care giants are dependent on payments Trump wants to end

An older man grabs his prescription drugs at a pharmacy counter.
A senior picks up his drug prescription. Photo: Joe Raedle/Getty Images

The 3 big health insurers that control a majority of Medicare's prescription drug coverage — CVS Health, Humana and UnitedHealth Group — are arguably the most at risk from the Trump administration's plan to eliminate rebates within Medicare.

The big picture: These companies rely heavily on rebates to offset the costs of covering seniors' prescriptions. Losing those rebates would shift billions of dollars away from them, and they could lose customers if they raise premiums to make up the difference.