Medicare beneficiaries with high drug costs often pay close to the list price, or a percentage of it, during certain phases of their coverage. They were required to do so even though, in many cases, the companies operating the plans were collecting rebates on the same drug.
The rule had been opposed by the insurers and pharmacy benefit managers, who contended that they wielded the rebates to pressure drug companies to keep prices low, and used the savings to keep Medicare premiums low.
But the drug industry has been campaigning for years that it is unfair for insurers to keep the rebates when consumers are paying the list price through high deductibles.
“At the end of the day, while we support the concept of getting rid of rebates and I am passionate about the problems and the distortions in system caused by this opaque rebate system, we are not going to put seniors at risk of their premiums going up,” Mr. Azar said.
He then tossed the ball to Congress, saying it could take up the rebate issue.
International Pricing Options
A pilot program announced last year has struck fear among drugmakers, who, like some Republicans in Congress, have described it as akin to foreign price controls. That project, unveiled in October, would tie the price of some drugs administered in medical offices like many cancer treatments to an international index of prices. The test program, under final review at the Office of Management and Budget, would last five years.
Senator Chuck Grassley of Iowa, the powerful Republican chairman of the Senate Finance Committee, denounced the idea last month, saying it could discourage research investments for new treatments. Conservative groups like Freedom Works and Americans for Tax Reform have been campaigning against the idea, too.
Even if Mr. Trump signs a broader executive order tying federal spending to overseas drug prices, it is not clear how much impact it would have. Most Americans are covered by commercial health insurance, which negotiates with drugmakers themselves. In many other countries with nationalized health care, the government is the negotiator.