Health and Human Services Secretary Alex Azar. Photo: Chip Somodevilla/Getty Images

The Trump administration is rolling out the policy specifics for a central promise in its plan to lower drug prices — taking on the system's middlemen.

The big picture: Health and Human Services Secretary Alex Azar has long had his eye on pharmacy benefit managers and the rebates that are their bread and butter.

  • The proposal HHS unveiled yesterday would essentially ban those rebates in Medicare and Medicaid, forcing PBMs to collect a flat fee for their work.

How it works: Today, drug companies set a price for their products and then PBMs negotiate a discount in the form of a rebate, on behalf of insurance plans. PBMs keep some of that money for themselves and the insurers use some of it to help lower premiums across the board.

  • HHS wouldn't allow that any more under the proposed rule, but it would permit discounts that flow directly to patients at the pharmacy counter.

Winners: In the short term, this would largely move money around. Patients would pay less at the pharmacy — which is good news for seniors who take a lot of expensive drugs.

  • The trade-off is that Part D premiums would increase, which in turn increases the government's costs.
  • HHS expects the savings from lower out-of-pocket costs to exceed the increase in premiums.
  • Politically, the pharmaceutical industry would be a winner here, too: Pointing the finger at PBMs is a big part of its strategy to stave off tougher controls on its own prices.

In the long term, HHS is hoping this will change the pharmaceutical industry's pricing practices.

  • For example, drug companies will sometimes agree to steep rebates in exchange for PBMs giving their drug preferred treatment over a competitor.
  • Without the rebate structure in place, the hope is that those types of deals simply won’t be possible, and pricing negotiations will center more heavily around drugs’ sticker prices.

The bottom line: This is a major shakeup in the way we pay for drugs. It's in the weeds, and it’s not a cure-all (nothing is), but it's big.

Go deeper: The drug pricing maze

Go deeper

Updated 16 mins ago - World

Massive explosion rocks Beirut

Photo: Anwar Amro/AFP via Getty Images

A major explosion has slammed central Beirut, Lebanon, damaging buildings as far as several miles away and injuring scores of people.

Driving the news: The cause of the explosion is unknown. It's also unclear how many people were killed or wounded, but the Lebanese Red Cross has told AP that casualties number in the hundreds. Reuters reports that at least 10 people have been killed, citing security sources.

Updated 52 mins ago - Politics & Policy

Coronavirus dashboard

Illustration: Sarah Grillo/Axios

  1. Global: Total confirmed cases as of 1 p.m. ET: 18,349,260 — Total deaths: 695,550 — Total recoveries — 10,951,112Map.
  2. U.S.: Total confirmed cases as of 1 p.m. ET: 4,732,418 — Total deaths: 155,942 — Total recoveries: 1,513,446 — Total tests: 57,543,852Map.
  3. States: New York City health commissioner resigns in protest of De Blasio's coronavirus response.
  4. Public health: 40% of Americans continue to put off medical care.
  5. Politics: Trump tells "Axios on HBO" that pandemic is "under control," despite surges in infections and uptick in deaths.
  6. Business: Low-income households are struggling to pay energy bills — Construction spending falls for 4th straight month.
Updated 1 hour ago - Science

The U.S. is at risk of attacks in space

Illustration: Annelise Capossela/Axios

Other nations are catching up to U.S. capabilities in space, potentially putting American assets in orbit at risk.

Why it matters: From GPS to imagery satellites and others that can peer through clouds, space data is integral to American national security.