White House Drops Plan to Eliminate Drug Rebates

WASHINGTON (CN) – The Trump administration said Thursday it is withdrawing a proposal that would do away with rebates in government drug plans, which it previously said would be a key component of slashing drug prices.

President Donald Trump speaks about kidney health at the Ronald Reagan Building and International Trade Center, accompanied by Health and Human Services Secretary Alex Azar, left, on Wednesday. (AP Photo/Alex Brandon)

The plan would have allowed people on Medicare to receive the rebates that pharmaceutical companies currently pay to insurers and middlemen called “pharmacy benefit managers,” who administer drug plans for groups of insured patients.

Proposed in January and set to take effect next year, President Donald Trump had hailed the rule as part of his larger effort to address rising health care costs. But its price tag of $177 billion over 10 years, according to a report from the nonpartisan Congressional Budget Office, led to heavy criticism from fiscal hawks.

White House spokesperson Judd Deere said “careful analysis and thorough consideration” were used in making the decision to scrap the rule.

“The Trump administration is encouraged by continuing bipartisan conversations about legislation to reduce outrageous drug costs imposed on the American people, and President Trump will consider using any and all tools to ensure that prescription drug costs will continue to decline,” Deere’s statement read.

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