• PhRMA is siding with the Trump administration on a proposal to change the rebate system for Medicare Part D and is calling out AARP for opposing it.
• “It just so happens that the reasons that [AARP] cites are the exact same reasons that insurance companies cite,” a PhRMA public affairs executive told The Daily Caller News Foundation in a phone interview Thursday.
• PhRMA says a majority of AARP members support the proposal, which would focus on middlemen called pharmacy benefit managers and force them to pass on savings from the prescription drug rebates to Medicare Part D beneficiaries.

The drug industry’s most powerful lobbying group is siding with the Trump administration on a proposal to change the rebate system for Medicare Part D and is calling out the AARP for opposing it.

“It just so happens that the reasons that [AARP] cites are the exact same reasons that insurance companies cite,” Robert Zirkelbach, executive vice president of public affairs at Pharmaceutical Research and Manufacturers of America (PhRMA), told The Daily Caller News Foundation in a phone interview Thursday.

The administration says the rebate rule will pass savings on prescription drugs to seniors and help patients taking lots of medications, but AARP has consistently lobbied against the proposal.

“We think there’s a clear connection between their positions on those policies and the fact that the vast majority of their revenue comes from insurance companies. They get more money from UnitedHealthcare alone every single year than they get from all 38 million members that they represent,” Zirkelbach said.

PhRMA launched an ad campaign Wednesday dinging AARP for opposing the proposal. PhRMA says a majority of AARP members support the proposal, which would focus on middlemen called pharmacy benefit managers and force them to pass on savings from the prescription drug rebates to Medicare Part D beneficiaries.

“Even after being told it may increase premiums by $3 to $6 per month, the vast majority of AARP members ⁠— 73 percent ⁠— support the proposed rule since savings at the pharmacy counter would more than offset premium increases,” PhRMA said in a statement. (RELATED: Juul To Cooperate With Congressional Investigation)

PhRMA cited a Morning Consult poll it commissioned that talked to 1,349 AARP members around the nation between May 22 and June 1. AARP took issue with questions in the poll and filed a complaint about it with the American Association for Public Opinion Research, which could have an answer on whether the poll violates its code of ethics within weeks.

“PhRMA is on the defensive because the Administration and elected officials from both parties have had enough with high drug prices. … We won’t stop until lifesaving drugs are more affordable. AARP wears PhRMA’s attacks as a badge of honor,” an AARP spokesperson told The Daily Caller News Foundation in a statement Thursday.

PhRMA stands by results of the poll.

“If they want to argue that their members don’t support rebate reform, I’m happy to have that debate,” Zirkelbach said.

What Is The ‘Rebate Rule?’

In order to get their drugs on health plans’ formularies, or lists of drugs that payers cover, drug manufacturers pay rebates to PBMs, Medicare Part D plans and Medicaid managed care organizations. Currently, safe harbor provisions exempt middleman organizations called pharmacy benefit managers (PBMs) from certain parts of the Anti-Kickback Statute. Health and Human Services (HHS) Secretary Alex Azar has been adamant that the rebates are truly “kickbacks,” and many seniors groups and physician advocates agree.

The proposed rule would end the “kickbacks” connected to Medicare Part D and Medicaid managed care programs. However, other rebates would still be allowed, HHS said when proposing the rule in January.

The rebate rule is part of a larger push to effect transparency in prescription drug pricing. AARP touts its work to increase transparency but maintains the rebate rule would leave too much power to set prices in the hands of drug manufacturers. (RELATED: The Trump Administration Says This Proposal Will Help Seniors Afford Their Drugs. AARP Says Not So Fast)

“AARP supports solutions that target the root of the problem – prices set by drug manufacturers – and is concerned about proposals that would simply shift costs within the system,” an AARP spokesperson told The Daily Caller News Foundation in a statement Thursday. “Notably, earlier this year, when seven pharmaceutical executives testified under oath to Congress, all said, even with the rebate rule, they would not commit to lowering drug prices for the American people.”

PhRMA supports the rebate rule even though it could be “incredibly disruptive” to the drug industry, Zirkelbach said.

“The system is broken, and it does need to change. We recognize that our industry needs to change as well. …  A lot of the policies that are being talked about in Washington would save money for the government, or they would save money for the insurance companies,” he said.

“But they would do very little to lower out-of-pocket costs for seniors when they go to the pharmacy counter to pick up medicine, and that’s really important,” Zirkelbach continued.

Strange Bedfellows

PhRMA and the Trump administration could be called strange bedfellows. PhRMA’s members include multibillion-dollar drug company Pfizer, which President Donald Trump called out for raising drug prices in July 2018.

“Pfizer [and] others should be ashamed that they have raised drug prices for no reason. They are merely taking advantage of the poor [and] others unable to defend themselves, while at the same time giving bargain basement prices to other countries in Europe [and] elsewhere. We will respond!” he wrote on Twitter July 10, 2018.

Zirkelbach pointed out that PhRMA is not always aligned with the Trump administration, especially when it comes to the idea of an international pricing index for drugs. The lobbying group still sees the rebate rule as “the right direction.”

“We’re going to work with anybody we can on policies that work for patients,” Zirkelbach said.

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