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Drug price reform could fall victim to infrastructure negotiations

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As lawmakers try to salvage a bipartisan infrastructure package, new rules meant to crack down on covert prescription drug deals could be scrapped.

The main negotiator for the republication of the $ 579 billion package, Sen. Rob Portman of Ohio, said on Monday Call that a rule that would bar certain discounts for drugmakers was likely to be removed as parties debated how to pay for infrastructure.

The rule’s rebates would ban flows to certain Medicare and Medicaid-funded programs. They save the government money, but some experts say they are also a major driver of price increase for brand name drugs. This can put big bumps in the bank accounts of the uninsured as well as those who pay coinsurance or honor deductibles, as they usually have to pay based on the inflated amounts.

Republicans and Democrats are fighting for “pay-for” to fund the bipartisan infrastructure bill.

One idea was to provide the Internal Revenue Service with more resources so it could go after rich bad payers who don’t pay all the taxes they owe. This would raise around $ 60 to $ 100 billion and it is supported by 58% of voters – including about half of the Republicans.

But this measure seems to be irrelevant for reasons that are not entirely clear.

Portman said Democrats wanted to use it to a separate infrastructure bill of $ 3.5 trillion they plan to pass under special rules that only require them to get 50 votes in the Senate. For their part, Democrats say Senate Republicans do not want to do anything that can be seen as helping the IRS.

Portman’s office did not respond to questions on Tuesday.

But it appears Portman is looking to scrap the reimbursement rule so federal health programs can collect more from drug makers. The Congressional Budget Office estimates that dropping it will cost federal health programs about $ 180 billion in rebates over a decade.

Developed under the Trump administration, the rule eliminate “safe havens” protect pharmacy intermediaries from prosecution under federal anti-rollback laws.

Intermediaries, called pharmacy benefit managers or PBMs, manage drug transactions in several ways.

They contract with payers such as insurance companies, which are often owned by the same company. They create lists of insured drugs. And they negotiate rebates and other discounts with drugmakers who want access to all of the “covered lives” that PBMs and insurers represent.

While part of the rebates are refunded to government programs like Medicare and Medicaid, critics say they are part of a non-transparent system that drives costs up.

For example, the Schaeffer Center at the University of Southern California last year published a white paper illustrating the link between increased discounts and list prices, which sSome experts say it is increasing to cover the cost of the rebates.

“There is an almost unequivocal relationship between increased discounts and higher list prices for branded prescription drugs.” Neeraj Sood, a senior researcher at the USC Schaeffer Center for Health Policy & Economics said in a statement.

He and co-author Karen Van Nuys looked at list prices and discounts from 2015 to 2018 for 1,300 brand name drugs, or about 84% of all prescribed in the United States during that time period. They found that every $ 1 increase in rebates can be associated with a $ 1.17 increase in list prices.

“High list prices have a direct impact on many patients, including uninsured and insured patients whose co-payments and deductibles are based on the list price of drugs. They also have an impact on overall healthcare spending, ”said Van Nuys. She added: “Recently, PBMs have argued that manufacturers set list prices unilaterally and therefore are solely responsible for increasing list prices. This research suggests that there is a much more dynamic relationship at play. ”

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