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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

Schumer's m(aj)ority checklist

Senate Minority Leader Chuck Schumer. Photo: Tasos Katopodis/Getty Images

Capitalizing on the Georgia runoffs, achieving a 50-50 Senate and launching an impeachment trial are weighty to-dos for getting Joe Biden's administration up and running on Day One.

What to watch: A blend of ceremonies, hearings and legal timelines will come into play on Tuesday and Wednesday so Chuck Schumer can actually claim the Senate majority and propel the new president's agenda.

The dark new reality in Congress

National Guard troops keep watch at security fencing. Photo: Kent Nishimura/Los Angeles Times via Getty Images

This is how bad things are for elected officials and others working in a post-insurrection Congress:

  • Rep. Norma Torres (D-Calif.) said she had a panic attack while grocery shopping back home.
  • Rep. Jim McGovern (D-Mass.) said police may also have to be at his constituent meetings.
  • Rep. Adam Kinzinger (R-Ill.) told a podcaster he brought a gun to his office on Capitol Hill on Jan. 6 because he anticipated trouble with the proceedings that day.
Off the Rails

Episode 3: Descent into madness ... Trump: "Sometimes you need a little crazy"

Photo illustration: Sarah Grillo/Axios. Photos: Tom Williams/CQ-Roll Call, Chip Somodevilla/Getty Images

Beginning on election night 2020 and continuing through his final days in office, Donald Trump unraveled and dragged America with him, to the point that his followers sacked the U.S. Capitol with two weeks left in his term. This Axios series takes you inside the collapse of a president.

Episode 3: The conspiracy goes too far. Trump's outside lawyers plot to seize voting machines and spin theories about communists, spies and computer software.

President Trump was sitting in the Oval Office one day in late November when a call came in from lawyer Sidney Powell. "Ugh, Sidney," he told the staff in the room before he picked up. "She's getting a little crazy, isn't she? She's really gotta tone it down. No one believes this stuff. It's just too much."