WASHINGTON — The commissioner of the Food and Drug Administration, Scott Gottlieb, on Thursday suggested that a key federal law on kickbacks could be reinterpreted by the government to help rein in the prices of prescription drugs.
Drug companies are currently being sued by lawyers who believe that the Byzantine system of rebates that flow between pharmacy benefit managers, drug manufactures, and insurers are really kickbacks. The current interpretation of the federal law shields these rebates from legal scrutiny.
But Gottlieb, in remarks delivered at the annual conference of the Food and Drug Law Institute, signaled that might change.
“One of the dynamics I’ve talked about before that’s driving higher and higher list prices, is the system of rebates between payers and manufacturers,” Gottlieb said. “And so what if we took on this system directly, by having the federal government reexamine the current safe harbor for drug rebates under the Anti-Kickback Statute?”
It is unclear if President Trump will address the matter in a speech on drug pricing he is expected to deliver next week.
The pharmaceutical industry has engaged in a massive lobbying campaign to shift the blame for high drug prices from the manufacturers, who set the list prices, to pharmacy benefit managers and insurers, who help determine how the products are paid for through a system of rebates. It’s an issue that has also vexed lawmakers, who are questioning the “black box” of drug pricing.
In a statement, the Pharmaceutical Care Management Association, which represents PBMs, did not address Gottlieb’s suggestion about changing the interpretation of anti-kickback laws. The group said that “getting rid of rebates would leave patients and payers, including Medicaid and Medicare, at the mercy of drug manufacturer pricing strategies.”
Gottlieb said Trump’s plan will address efforts by brand pharmaceutical companies to make it more difficult to get samples of drugs to make sure the generics are indeed equivalent.
“We’re going to be unveiling some new guidance in the next few weeks, as part of the president’s plan, which addresses some aspects of these loopholes that companies exploit when it comes to [this issue],” Gottlieb said.
Gottlieb said Secretary of Health and Human Services Alex Azar plans to try to bring down drug prices through “a series of changes to the pricing mechanisms in [Medicare] Part D.”
He did not specify what these changes would be, but in a separate statement, Azar said the administration is working on a “comprehensive plan” to bring down the high price of prescription drugs.
Trump’s budget blueprint included a proposal to move some drugs currently covered under the Part B portion of the Medicare program, which mostly covers inpatient hospital expenses, to the Part D program, which covers outpatient drugs. Drug makers are resisting that idea.
“I can tell you that the framework that the secretary [of health and human services] has developed will dismantle many of the provisions that shield parts of the drug industry from more vigorous competition,” Gottlieb said.
Gottlieb called out companies for lobbying for “rules and restrictions” that have prevented “truly market-based pricing and competition.”
“I feel strongly that this is shortsighted,” Gottlieb said. “It’s hard to defend the principle of market-based pricing if individual firms seek to use legal and political maneuvering to seek temporary advantage by gumming up the rules in their favor.”