Bipartisan infrastructure deal may repeal Trump's Medicare Rebate Rule: Will beneficiaries be affected?

Lawmakers looking to lock down a bipartisan infrastructure agreement are considering eliminating a Trump-era rule on Medicare rebates in order to raise revenue, which likely won’t end up hurting the program’s beneficiaries, experts say.

The Medicare Rebate Rule is designed to lower the cost of prescription drugs by passing rebates directly to consumers at the point of sale.

Former Health and Human Services Secretary Alex Azar had said he did not think the measure would result in increased federal spending, out-of-pocket costs or premiums for Part D beneficiaries.

However, the Congressional Budget Office estimated a sharp uptick in spending – by about $177 billion over the course of 10 years. 

"With the loss of rebate revenue, plans are expected to raise their premiums, leading to increased premium subsidies paid by the federal government, resulting in greater overall costs for the Medicare program as well as higher drug plan premiums paid by enrollees," the Kaiser Family Foundation explained. "Banning rebates in Part D would not necessarily lead manufacturers to lower list prices, particularly since rebates in the commercial market are still allowed."

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Stacie B. Dusetzina, an associate professor of health policy at the Vanderbilt University School of Medicine, told FOX Business that the rule would have helped some patients taking drugs with very large rebates, but would have likely raised premiums for all beneficiaries.

"It also would not help people taking some of the most expensive drugs that lack competition," Dusetzina added. "For those patients, the rebates rule would have only increased premiums. It is important for Congress to work towards reducing drug prices and improving coverage for patients in a way that benefits everyone and makes high-value drugs accessible to patients."

Juliette Cubanski, deputy director of the program on Medicare policy at the Kaiser Family Foundation, said that cost relief for some was dependent on whether manufacturers actually passed along price discounts at the pharmacy counter.

"The same beneficiaries who might have seen a lower price for certain drugs they take could also have faced higher premiums for their drug coverage," Cubanski added. "So this proposal wasn’t an obvious win-win in terms of lower federal spending and overall savings to beneficiaries, which does characterize other drug price proposals currently on the table, such as allowing the federal government to negotiate drug prices."

The Biden administration has delayed the rule until 2023.

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Sen. Rob Portman, R-Ohio, said earlier this week that beefing up IRS enforcement was a no-go as lawmakers looked for revenue-raising measures to support their infrastructure plans.

Twenty-two senators from both parties nailed down a bipartisan infrastructure agreement last month, but have disagreed since over how to pay for the $579 billion in new infrastructure funding.

Sen. Mitt Romney, R-Utah, who is among the group of senators working on the proposal said on Tuesday that he expected they would have all outstanding issues resolved by the end of the week.

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Democrats are still advancing their own separate $3.5 trillion spending proposal that could potentially pass via the fast-track budget reconciliation process, which would allow them to bypass Republicans so long as all Senate Democrats supported the plan.

They were, however, hoping to use the repeal of the Medicare Rebate Rule to fund their package.