PCMA Files Motion to Vacate Effective Date for Rebate Rule

January 26, 2021

(Washington, D.C.) - The Pharmaceutical Care Management Association (PCMA) has filed a motion for summary judgment to vacate the effective date of the Trump Administration's rebate rule.

The motion for summary judgment, filed in the U.S. District Court for the District of Columbia, seeks to vacate the January 1, 2022 effective date for the rebate rule with respect to Part D. The motion is vitally important to ensuring the stability of the Medicare Part D program as the Biden Administration reviews the Trump Administration's 'midnight regulations' and PCMA proceeds with litigation to revoke the rule in its entirety.

Under the Medicare Part D rules, annual drug plan bids must be submitted in early June for the subsequent plan year, and Part D plans currently have largely concluded negotiations with manufacturers and are formulating their benefit designs and bids. Moreover, the Centers for Medicare & Medicaid Services (CMS) has not even begun the months-long Part D rulemaking for the many program changes that would be required to implement the rebate rule. Medicare drug plan bids are used to set beneficiary premiums and other costs.

'The Trump Administration's hastily finalized rebate rule is a clear and present threat to destabilize the Medicare Part D drug benefit,' said PCMA President and CEO JC Scott. 'Not only is the rebate rule itself misguided, but the aggressive timeline is virtually impossible to meet. To be clear, the rebate rule in its entirety should be invalidated, but immediate action must be taken on the effective date. Otherwise, the 47 million Part D beneficiaries could face significant premium increases in 2022.'

To read the filing, click here.

The motion for summary judgment follows the filing of PCMA's lawsuit asking the court to set aside the rebate rule under the Administrative Procedure Act. The PCMA lawsuit also includes a request for a declaration from the court that federal law protects the rebates that the Office of Inspector General, U.S. Department of Health and Human Services (HHS) is seeking to remove from the discount safe harbor regulation.

Here are the Facts on the Rebate Rule:

• Part D Premiums Will Increase Dramatically. While about 10 percent of beneficiaries would save under the rebate rule, the other 90 percent would pay more. If premiums increase as much as the 25 percent suggested by the CMS Office of the Actuary (OACT), the average monthly premium in 2020 would have increased from $38.13 to $47.66, with a proportionate increase in 2021 and future years. This would mark the largest average premium increase in the history of the program. Further, because Part D is voluntary, it could destabilize the program if higher premiums cause healthier beneficiaries to drop coverage or never sign up at all.
• Rebates Lower Medicare Costs. Reports issued by the Government Accountability Office and Health and Human Services Office of Inspector General confirm that PBM-negotiated rebates are passed through and used to lower prescription drug costs in the Medicare program.
• The Rebate Rule is One of the Most Expensive Regulations in History. According to the Congressional Budget Office, the Trump Administration's rebate rule would cost taxpayers $177 billion over ten years. OACT also estimated the cost to be as high as $196 billion over 10 years, and Avalere Health estimated the proposed rule will cost taxpayers $400 billion over that time.
• Poll: Medicare Part D Beneficiaries are Concerned about Proposed Changes to Drug Plans. Senior registered voters enrolled in Medicare Part D will be less likely to support the reelection of their members of Congress and presidential candidates if those elected officials back proposals eliminating prescription drug negotiations and price concessions that would result in Part D premium increases.
• The Rule Does Nothing to Address Prescription Drug List Prices. The prior HHS Secretary asserted that drug manufacturers might lower their prices if the rule were implemented. The fact is the manufacturers - and only manufacturers - set drug prices, and nothing in the rule requires them to lower their prices.

Click here to see widespread stakeholder opposition to the rebate rule including: AARP, AHIP, the Better Medicare Alliance, academics, and high-ranking lawmakers. Visit the PCMA website for more information.

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