Part of Trump's drug pricing plan is already happening
Add Axios as your preferred source to
see more of our stories on Google.
As part of its plan to lower prescription drug prices, the Trump administration wants to force a major change in the way industry middlemen make their money. But that change is already happening naturally — and drug prices aren't falling.
The big picture: Pharmaceutical companies place the blame for high drug prices on pharmacy benefit managers and their complex system of rebates. The Trump administration largely agrees with that assessment, and has proposed a major overhaul that would make rebates a lot less lucrative for PBMs.
Yes, but: Rebates are already a shrinking part of PBMs' profits, and list prices of drugs aren't coming down.
- PBMs are keeping a smaller share of rebates and passing more along to their clients.
- Instead, PBMs are collecting more revenue through various fees — the same shift the Trump administration envisions — and through a practice called "spread pricing," according to a Pew analysis.
- Express Scripts, one of the largest PBMs, explicitly told investors last year it would find "an alternate funding / pricing structure" to offset lost rebate dollars.
The bottom line: "One can call something a rebate, a flat fee or an elephant. It still represents a lucrative flow of money, and the influence that goes along with it,” said Robin Feldman, a UC Hastings law school professor who recently wrote a book exploring these deals.
