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Pharma CEOs on Trump’s rebate plan effect on drug prices



The Trump administration recently proposed getting rid of a key part of the US drug pricing system that critics say helps drive up drug prices.

The proposal has drug discounts, often called “rebates,” in its crosshairs. Rebates are negotiated by intermediaries in the healthcare system to get better prices on medications. But patients also don’t always get those lower rates when paying for a medication at the pharmacy.

The pharmaceutical industry has applauded the new Trump administration proposal, saying it will help patients. The proposal applies to Medicare’s prescription drug coverage and to some parts of the Medicaid program.

But the change would also put the ball in drugmakers’ court, and raises a major and so far, unanswered, question.

If the new rebate proposal goes through, will drug companies lower their prices?

Read: The CEO of a $210 billion pharma company says that US drug prices are working against patients. One chart explains why.

On Tuesday, Sen. Chuck Grassley of Iowa tried to get an answer to that question, during a hearing he led to examine high US drug prices. He asked seven top pharmaceutical executives if they would commit to lowering their prices, should rebates be curbed.

“Some of you have voiced support for the recent rebate rule proposed by the administration,” Grassley said. “Should the administration finalize this rule, will you commit to lowering your drug prices?”

Sen. Chuck Grassley, R-Iowa, chairman of the Senate Finance Committee, attends a hearing on drug prices, Tuesday, Feb. 26, 2019 on Capitol Hill in Washington.
Associated Press

Their answers were mixed. Most were clear that they would support it — but also added some caveats. Here’s what they said:

  • AbbVie CEO Richard Gonzalez: “Mr. Chairman, we are supportive of the rule. We’d like to see it in its final form, obviously, to make a final decision. But we are supportive of taking the discount to the patient at the point of sale.”

  • AstraZeneca CEO Pascal Soriot: “The same for us senator. I would go one step further: If the rebates were removed from the commercial sector as well, we would definitely reduce our list prices.”

  • Bristol-Myers Squibb CEO Giovanni Caforio: “We have the same positions.”

  • Jennifer Tauber, executive at Johnson & Johnson’s Janssen unit : “Yes we’re supportive, and that definitely would be my goal. We would just need to see the final legislation, provided that there aren’t additional fees that are added into system to compensate for the rebates.”

  • Merck CEO Kenneth Frazier: “I would expect that our prices would go down if we change the system. Again, on the commercial side as well as the Medicare side.”

  • Pfizer CEO Albert Bourla: “It is very clear intention that we will not keep a single dollar from these rebates. We will try to move every single penny to the patients. And we think if this goes also to the commercial plans, that it would be even better for more patients.”

  • Sanofi CEO Oliver Brandicourt: “Lowering list price has to be linked to better access and affordability at the counter for the patients.”

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