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Patients are paying more out of their pockets for drugs. Photo: Jeffrey Greenberg / UIG via Getty Images

Health insurers and pharmacy benefit managers are blasting a proposed federal policy that would lower what patients pay out of pocket when they pick up their prescriptions, saying it coddles the pharmaceutical industry. But drug companies are firing back, accusing insurers and PBMs of keeping larger drug discounts for themselves and screwing over consumers in the process.

Get smart: Patients are caught in the middle of yet another health care industry gunfight.

The Centers for Medicare & Medicaid Services received more than 1,600 comments on a proposed rule that would make major changes to Medicare Advantage and the Medicare Part D drug program. One of the most contentious suggestions would mandate a certain amount of drug company rebates be applied to what people pay at the point of sale at pharmacies.

  • The issue: Say a drug has a list price of $1,000, and an insurer or PBM negotiates that down to $500. However, consumers have to pay coinsurance rates and deductibles based on the $1,000 list price, not the discounted amount. This has led to price shock for many people picking up their prescriptions, and more people are having trouble affording their medicines.
  • The federal government asked whether it would be a good idea to require insurers and PBMs that sell Medicare Part D plans to use a portion of those negotiated drug rebates to lower what people pay at the pharmacy counter.

Behind the curtain: The insurance and pharmacy benefit management industries are up in arms, and have no qualms about attacking drug makers. Insurers and PBMs keep some of the drug rebates for themselves, but they say those savings also go toward lowering insurance premiums.

  • If they are forced to use rebates to lower consumers' out-of-pocket costs, they will raise premiums in response, which will waste taxpayer money that funds Medicare Part D, according to lobbying groups and companies.
  • America's Health Insurance Plans and other insurer groups said the policy doesn't address the "root cause" of skyrocketing drug costs: "excessive list prices for drugs and excessive price increases that are set solely by and fully within the control of manufacturers."
  • It may encourage a race to the bottom among drug companies and make it easier for them to scale back their rebates, according to Express Scripts, one of the largest PBMs in the country.
  • The Pharmaceutical Care Management Association, which lobbies on behalf of PBMs, argued such a proposal violates trade secrets law.
  • Aetna, CVS Health and UnitedHealth Group all bashed the policy, too. Aetna said drug companies would reap twice as much in savings over consumers.
  • The Pharmaceutical Research and Manufacturers of America did its own math and said pushing rebates to the point of sale would save Medicare and consumers money, but admitted premiums would go up.

Between the lines: Both sides catch parts of the truth, which is best summarized by the independent Medicare Payment Advisory Commission. The policy would do nothing to lower the sticker price of drugs, and it would lead to higher drug premiums for seniors and disabled people. But health plans and PBMs profit a lot from the current setup, and the secretive nature of drug rebates keeps patients in the dark.

There's no signal or guarantee the federal proposal would move the needle on Medicare's drug affordability.

The bottom line: While the various health care camps fight to either keep the status quo or push for vested interests, drug prices continue to hammer the wallets of Medicare patients who need their medications.

Go deeper

Updated 16 mins ago - Energy & Environment

Thousands without power as "hazardous" winter storm lashes East Coast

Satellite imagery of the Northeastern U.S. taken by NOAA on Jan. 17. Photo: NOAA

A major winter storm lashed much of the East Coast Sunday and Monday, causing widespread power outages and disrupting travel over the holiday weekend.

The latest: Authorities in North Carolina confirmed that two people died in a car crash and that they responded 600 vehicle accidents during the storm on Sunday, per the Washington Post.

3 hours ago - Health

CDC director says COVID-19 messaging should have been clearer

Rochelle Walensky. Photo: Stefani Reynolds-Pool/Getty Images

Rochelle Walensky, director of the Centers for Disease Control and Prevention, said in an interview with the Wall Street Journal that the messaging around the COVID-19 pandemic and changing guidance should have been clearer.

State of play: Walensky is being coached by media experts and is planning to have more press briefings by herself in order to ensure that CDC is seen as an independent, scientific entity, rather than as a political one, the Journal reports.

3 hours ago - World

UAE asks U.S. to reinstate Houthi terrorist designation after attack

Secretary of State Tony Blinken (left) listens to United Arab Emirates Foreign Minister Sheikh Abdullah bin Zayed al-Nahyan during a joint news conference at the State Department iin October. Photo: Andrew Harnik/Pool/AFP via Getty Images

Emirati Foreign Minister Abdullah Bin Zayed asked Secretary of State Tony Blinken in a phone call Monday to re-designate the Houthi rebels in Yemen as a terrorist organization, a senior Emirati official told Axios.

Why it matters: Less than a month after he assumed office, President Biden rolled back the Trump administration’s decision to make the designation. He said it hampered humanitarian assistance to the Yemeni people. Since then, the Houthis have escalated their attacks against Saudi Arabia and other countries in the region — including an attack Monday in Abu Dhabi.