FDA Chief Questions Protections on Drug Rebates

A federal law that protects drug rebates between pharmacy benefit managers, drug manufacturers, and insurers could be reinterpreted to prevent these types of “kickbacks,” according to U.S. Food and Drug Administration (FDA) Commissioner Scott Gottlieb, MD. Revising this law could help control skyrocketing drug prices.

Speaking at the annual conference of the Food and Drug Law Institute, Mr. Gottlieb said, “One of the dynamics … that’s driving higher and higher list prices is the system of rebates between payers and manufacturers. … 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?”

If this rebate system fell under the anti-kickback law, it would be illegal to pay an incentive for drugs or services that Medicare, Medicaid, or other federal health-care programs cover. “Such a step could help restore some semblance of reality to the relationship between list and negotiated prices, and thereby boost affordability and competition,” Mr. Gottlieb added.

The remarks raised new concerns on Wall Street. As reported by Reuters, some drugmakers’ shares fell after Mr. Gottlieb’s comments: Biogen fell 2.8 percent to $266.44 per share, Celgene dropped 1.7 percent to close at $85.40, and Amgen fell 1.7 percent to $166.39.

New proposals to curb continuously rising drug costs are expected to be unveiled by President Donald Trump soon, he added, including “a series of changes to the pricing mechanisms in [Medicare] Part D.”

Sources: Reuters, May 3, 2018; STAT News, May 3, 2018.