Hospitals and Doctors Win, Pharma Loses in Infrastructure Deal

  • Deal delays rebate rule, adds new drugmaker rebate
  • Provider relief fund untouched after hospital lobbying

Hospital and doctors’ groups successfully lobbied to save Covid relief money earmarked for their members, while pharmaceutical companies are expected to lose billions of dollars as part of a bipartisan infrastructure deal struck Wednesday.

The $550 billion infrastructure package negotiated by a bipartisan group of senators would be paid in part by delaying a Trump-era regulation to end some pharmaceutical rebates and refunds from drugmakers for some kinds of physician-administered single-use medicines.

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Not included in the deal: a clawback of $43.7 billion in unspent Covid relief funds marked for health-care providers, which lawmakers had considered taking back. Sen. Ron Wyden (D-Ore.) confirmed the relief funds were untouched.

Leaning on cost offsets that affect the revenue of drugmakers, rather than those of health-care providers, highlights which sector has a bigger constituency in Congress.

“Cases are going up,” Wyden said of Covid-19 prevalence in the U.S. “I want to make sure this doesn’t impact our nursing homes and hospitals that are getting hit.”

He added that he doesn’t support how the Trump administration designed the rebate rule, and plans to put together a drug pricing bill later this year.

Evelyn Hockstein-Pool/Getty Images
Senate Finance Committee Chair Ron Wyden presides over a hearing June 8, 2021 in Washington.

The Trump rule aims to end Medicare rebates to pharmaceutical middlemen and make drugmakers pass any discounts to consumers. That could balloon Medicare drug benefit premiums, which are subsidized by the government.

Hospital Lobby

Hospital groups such as the American Hospital Association lobbied against rescinding the relief funds.

The infrastructure package includes a provision that seeks refunds from drugmakers for some kinds of physician-administered single-use medicines, a move that lawmakers estimate would save the government $3 billion, according to a summary of the provision shared with Bloomberg Government.

The Pharmaceutical Research and Manufacturers of America, the drugmakers’ lobby, supported the rebate rule from the Trump administration and sought to keep it in place.

Sen. Bill Cassidy (R-La.) said he supported the rebate rule but Democrats signaled they were planning to block it, so it became a pay-for.

“I actually agree with the policy but it was 186 billion in costs of the Treasury,” he said, referring to the cost of fully implementing the rule over a decade.

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One area providers didn’t win: The package will delay the Medicare sequester by less than a year, saving the government almost $9 billion.

The sequester, or planned cuts to hospital and doctor reimbursements, is set to run from fiscal 2022 to 2030. These cuts were originally slated to run from fiscal 2013 to 2021 but have repeatedly been delayed and extended.

To contact the reporter on this story: Alex Ruoff in Washington at aruoff@bgov.com

To contact the editors responsible for this story: Anna Yukhananov at ayukhananov@bloombergindustry.com; Robin Meszoly at rmeszoly@bgov.com

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