Health and Science

Senate panel wants to bring back drug proposal loved by Big Pharma in new White House-backed bill

Key Points
  • Senate Finance Committee Chairman Chuck Grassley says he wants to revive an abandoned White House proposal that would have eliminated rebates from government drug plans.
  • President Donald Trump decided to pull the proposal after concerns that it would cause insurance companies to increase premiums for seniors, HHS Secretary Alex Azar had told reporters.
Senate Finance Committee Chairman Chuck Grassley (R-IA) speaks during a forum regarding the future of health care and drug pricing in America, hosted by Pfizer and Axios, on June 5, 2019 in Washington, DC.
Mark Wilson | Getty Images

Senate Finance Committee Chairman Chuck Grassley said Thursday that he wants to include an abandoned White House proposal that would have eliminated rebates from government drug plans in the final version of a bipartisan drug pricing bill.

The White House earlier this month withdrew its plan to ban rebates that drugmakers pay to pharmacy benefit managers. Drug manufacturers pay the rebates to PBMs, sometimes called middlemen, for getting their drugs covered by Medicare's Part D prescription plan. President Donald Trump decided to pull the proposal after concerns that it would cause insurance companies to increase premiums for seniors, Health and Human Services Secretary Alex Azar later told reporters.

Pharmaceutical companies supported the rule, arguing the rebate system drove up both list prices and out-of-pocket costs. PBMs and insurers were opposed.

"The administration threw us a curveball" when it scrapped the proposal, Grassley said Thursday during a planned markup of a Senate package to lower drug prices.

Grassley, R-Iowa, and Ron Wyden, D-Ore., the committee's ranking member, on Tuesday introduced a bipartisan bill to lower prescription drug prices for seniors. The bill, supported by the White House, would make changes to Medicare, the federal government's health insurance plan for the elderly, by adding an out-of-pocket maximum for beneficiaries. It also includes a penalty for pharmaceutical companies if the prices of their drugs rise faster than inflation.

The Senate Finance Committee cleared the bill Thursday, 19 to 9, advancing it to the full Senate floor.

The Pharmaceutical Research and Manufacturers of America, or PhRMA, the industry's main trade group, said it opposes the package, arguing it "fails to meet the fundamental test of providing meaningful relief at the pharmacy counter for the vast majority of seniors."

PhRMA CEO Steve Ubl met with Trump on Wednesday to discuss its problems with the Senate bill, the industry group said in a statement Thursday. "We expressed our desire to ensure policy reforms result in immediate and meaningful savings for patients at the pharmacy counter."

Although supported by the White House, the Senate bill on Thursday received pushback from Republicans on the inflation penalty rule. Senate Republicans argued the rule was an excessive government intervention. However, an amendment to scrap the proposal from Sen. Pat Toomey, R-Pa., failed to pass the Senate panel.

VIDEO3:4603:46
Here's how drug rebates work