Alex Azar says his agency has the power to eliminate pharmaceutical rebates


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US Health and Human Services Secretary Alex Azar has said in an interview with Reuters, that it is within the Department of Health and Human Services power to eliminate rebates on prescription drug purchases.

The former drug company executive said in an interview: “We are not dependant on the voluntary action of pharmaceutical companies. We are not counting on their good will or their altruism. We are counting on our efforts, working with congress, to rewire this segment of the economy to reverse the ever increasing incentives towards high list prices.”  

The statement accords with the Trump administration’s plan to lower prescription drug prices by restructuring the system through which drug prices are negotiated. Currently Pharmacy Benefit Managers (PBM’s) such as CVS, Express Scripts and UnitedHealth’s Optum are compensated by payments linked to the list price of drugs.

However the Trump administration has proposed a plan to pay PBM’s through set fees rather than by commission in an effort to reduce drug prices for consumers.  

As explained by Alex Azar, Department of Health and Human Services Secretary: “Everyone in the system, from drug manufacturers to pharmacy benefit managers and wholesalers, makes their money as a share of list prices, so they have little incentive to force them down.”

Azar’s statement comes just a few weeks after Pfizer CEO Ian Read told investors “I believe we are going to go to a marketplace where we don’t have rebates,” as he answered questions about the Trump administration’s plans to overhaul drug pricing.

Louis Goss