Lowering Prices for Patients by Eliminating Kickbacks to Middlemen
Jul 29, 2020
Signed by: Donald Trump
Signed on: Jul 24, 2020
Published on: Jul 29, 2020
Jul 29, 2020
Signed by: Donald Trump
Signed on: Jul 24, 2020
Published on: Jul 29, 2020
Summary
Changes rules so that drug discounts go directly to patients at the pharmacy instead of to insurance middlemen.
What problem does this solve?
Insurance middlemen get large discounts on drugs, but these savings are not passed on to Medicare patients, who pay high prices. This order directs the government to change the rules so these discounts must be given to patients at the pharmacy.
What does this order do?
Passes drug discounts directly to patients
Establishes a policy that discounts offered on prescription drugs should be given to patients, not to insurance plan sponsors or pharmacy benefit managers (PBMs).
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Directing drug rebates to patients instead of middlemen
Removes legal protection for drug rebates to middlemen
Directs the Secretary of Health and Human Services to remove "safe harbor" protection for drug rebates that are not applied at the pharmacy counter for Medicare Part D patients.
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Directing drug rebates to patients instead of middlemen
Creates new protections for point-of-sale discounts
Tells the Secretary of Health and Human Services to create new safe harbors that legally protect discounts that are applied at the patient's point-of-sale to lower their costs.
Requires confirmation that premiums will not increase
Prohibits the new rule from taking effect until the Secretary of Health and Human Services confirms publicly that it is not expected to raise federal spending, Medicare premiums, or total patient costs.
Who does this affect?
- Medicare Part D beneficiaries
- Pharmacy Benefit Managers (PBMs)
- Pharmaceutical drug manufacturers
What is the real world impact?
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Lowers out-of-pocket drug costs for seniors
Directs drug rebates, which currently go to insurance middlemen, to be passed directly to Medicare patients when they buy medicine. This could save patients hundreds or thousands of dollars each year.
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Increases transparency in drug pricing
Forces the price paid at the pharmacy to be closer to the actual price negotiated by insurance companies. This makes the complex system of drug pricing a little clearer for consumers.
When does this start?
This executive order took effect on July 24, 2020, directing the government to complete the rulemaking process.