Health and Human Services wants to end 'middlemen kickbacks' in drug pricing by targeting rebates

The Department of Health and Human Services is proposing to lower the list price of prescription drugs by correcting what it calls the perverse incentive to increase list prices to get higher rebates. The rebates are passed on to health plans, which use them to lower the price of premiums. But Part D premiums are not the problem for drug prices, a senior HHS official said Thursday. The problem is the out-of-pocket cost borne by consumers. Premiums may go up 3-5 percent under the regulation, but the out-of-pocket savings will exceed that amount. The regulation is focused on increasing competition in the drug market by creating incentives to lower list prices and encouraging manufacturers to pass discounts directly onto patients.