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Expand chart
Adapted from a Pew report; Chart: Axios Visuals

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.

Go deeper

The new Washington

Illustration: Sarah Grillo/Axios

The Axios subject-matter experts brief you on the incoming administration's plans and team.

Rep. Lou Correa tests positive for COVID-19

Lou Correa. Photo: Tom Williams/CQ-Roll Call, Inc via Getty Images

Rep. Lou Correa (D-Calif.) announced on Saturday that he has tested positive for the coronavirus.

Why it matters: Correa is the latest Democratic lawmaker to share his positive test results after last week's deadly Capitol riot. Correa did not shelter in the designated safe zone with his congressional colleagues during the siege, per a spokesperson, instead staying outside to help Capitol Police.

Far-right figure "Baked Alaska" arrested for involvement in Capitol siege

Photo: Shay Horse/NurPhoto via Getty Images

The FBI arrested far-right media figure Tim Gionet, known as "Baked Alaska," on Saturday for his involvement in last week's Capitol riot, according to a statement of facts filed in the U.S. District Court in the District of Columbia.

The state of play: Gionet was arrested in Houston on charges related to disorderly or disruptive conduct on the Capitol grounds or in any of the Capitol buildings with the intent to impede, disrupt, or disturb the orderly conduct of a session, per AP.