Press Releases
July 24, 2020
Better Medicare Alliance Decries Executive Order Reviving Flawed “Rebate Rule”

Previously rejected plan favored by drugmakers threatens premium increases, supplemental benefit reductions for seniors in MA-PD plans

Washington, D.C. – Better Medicare Alliance (BMA), the leading research and advocacy organization supporting Medicare Advantage, responded today to the Trump administration’s newly announced executive action on prescription drug prices.

The President’s Executive Orders include a pharmaceutical industry-favored measure reviving the previously withdrawn “rebate rule,” that eliminates cost-saving rebates for seniors in Medicare Part D plans, including the 19.5 million beneficiaries enrolled in Medicare Advantage-Prescription Drug (MA-PD) plans.

Better Medicare Alliance wrote to HHS Secretary Alex Azar just this week urging the Administration not to move ahead on this flawed proposal.

“We share the Administration’s desire to address out of control prescription drug costs for seniors, but this previously withdrawn, pharmaceutical industry favored approach will not accomplish that goal.  Instead, it threatens higher premiums and diminished supplemental benefits for millions of seniors in MA-PD plans – increasing out-of-pocket costs for vulnerable beneficiaries amid the height of a global pandemic,” said Allyson Y. Schwartz, President and CEO of the Better Medicare Alliance. “The Administration was right to scrap this proposal the first time. They knew it would not solve the root problem of high drug prices and would levy unintended consequences for the very seniors it aims to protect. That reality has not changed. We urge the Administration to pursue real solutions that meet beneficiaries’ prescription drug needs while maintaining the high-quality, affordable coverage found in Medicare Advantage.”

The President’s executive order comes despite a September 2019 Department of Health and Human Services Office of Inspector General (OIG) report finding that Part D prescription drug rebates “substantially reduced” Part D spending from 2011 to 2015.

According to HHS’ own analysis, the rule is estimated to increase premiums for Part D beneficiaries by 19% in the first year and 25% over the next ten years. This would represent the largest increase in Part D premiums in the program’s history.

Further, a 2019 analysis from Avalere Health found that eliminating prescription drug rebates would “have the consequence of increasing beneficiary premiums and reducing benefit offerings by Medicare Advantage-Prescription Drug (MA-PD) plans.” Medicare Advantage plans with $0 premiums, for example, would see a 28% decrease in the funds available to provide supplemental benefits to enrollees.

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