The White House has reversed its ruling from earlier this year that would have amended the safe harbor regulations eliminating traditional rebates and requiring discounts be moved to the point-of-sale. The ruling was designed to decrease the overall cost of drugs and lower the out-of-pocket cost burden for Medicare and Medicaid recipients with the largest impact being to the Medicare population and health plans. While the proposed ruling was well intentioned, most industry association and organizations predicted that while it would decrease the member impact at the point-of-sale, the overall impact would likely produce higher premiums and increase the cost of the program to the federal government.

The administration is expected to continue ongoing efforts to lower prescription drug costs, including a forthcoming rule to implement a new “International Pricing Index” payment model and possibly an executive order of similar nature. The administration also referred to efforts on reimporting lower-cost prescription drugs and empowering patients with meaningful transparency to include the executive order issued last month that could supplement their efforts to lower prescription drug costs.

Also this week, U.S. District Court Judge Amit Mehta struck down the Trump Administration’s rule to require pharmaceutical companies to disclose drug prices in consumer advertising. That rule, finalized in May, would have required direct-to-consumer television advertisements for prescription drug and biological products covered by Medicare or Medicaid to include the wholesale acquisition cost (list price) if it is equal to or greater than $35 for a month’s supply or the usual course of therapy.

The pharmaceutical industry, led by Merck, Eli Lilly, Amgen, and the Association of National Advertisers quickly challenged the rule in June, arguing that these disclosures would be misleading due to negotiated costs often being a fraction of a drug's list price, causing consumers to be discouraged from seeking treatment due to the higher advertised prices.

The ruling states that the administration does not have the authority to compel manufacturers to disclose list prices. Judge Mehta wrote, “To accept the agency's justification here would swing the doors wide open to any regulation, rule, or policy that might reasonably result in cost savings to the Medicare and Medicaid programs, unless expressly prohibited by Congress.” The Trump Administration responded that they will continue their efforts on lowering drug prices and empowering patients through more transparency in healthcare costs.

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