The CMS could issue a rule this year requiring healthcare companies to share more information on drug costs, as the Trump administration continues to push for more price transparency in the sector, Administrator Dr. Mehmet Oz said Tuesday.
“If we can do this in an effective way — and we’ll have a rule on this by the end of the year, we hope — then we’ll be able to very forcefully go after folks who are not transparently sharing what it actually costs, or what the transaction prices were, for the drugs that Americans are trying to pick up,” Oz said.
Oz, who spoke during an event hosted by Transparency Rx, a group of small pharmacy benefit managers that say they’re more transparent on pricing than current market leaders, did not provide additional detail on the rule. The CMS did not respond to a request for more information.
But the administrator’s comments suggest the CMS could be considering rulemaking to force insurers and their pharmacy benefit managers, powerful middlemen in the pharmaceutical supply chain, to disclose the net prices of drugs, according to one expert.
“It’s entirely possible that [regulators in the Trump administration] continue to want disclosure of net prices,” said Matt Fiedler, a senior fellow at the USC-Brookings Schaeffer Initiative for Health Policy.
The cost of a drug after PBMs negotiate savings with drugmakers is a closely guarded secret for the companies. A lawsuit from the biggest PBM lobby, the PCMA, scuttled a previous attempt from the first Trump administration to require public disclosure of net costs.
But the HHS and other departments are currently hustling to improve healthcare price transparency following an executive order from President Donald Trump earlier this year. Now could be an opportunity to try again — and potentially put harsher enforcement penalties in place, too, amid low compliance among hospitals and payers with existing price transparency standards.
“One way of interpreting Oz’s comments is that [regulators] want to be able to move to the posture where they’re taking substantial enforcement against plans that fail to comply, and they felt they needed to go through another rulemaking process to put themselves on firm legal ground to take that kind of action,” Fiedler said.
Breathing fresh life into price transparency
The Trump administration issued a request for information in May on how to improve prescription drug price transparency amid rising animus against the highly concentrated and opaque U.S. pharmaceutical supply chain, which is largely controlled by just three PBMs: CVS’ Caremark, Cigna’s Express Scripts and UnitedHealth’s Optum Rx.
The RFI from the HHS and the Labor and Treasury departments asked for input on how the government could build on existing drug pricing disclosure requirements to improve transparency in the area.
“The RFI is going to allow us to have some insights about how to actually figure out what that drug pricing is, what it actually should cost, and allow us to be able to in a very, I believe, transformative way push that information down to the clinicians and the patients,” Oz said Tuesday.
The Trump administration historically has been a big believer in injecting more transparency into the healthcare ecosystem, arguing that giving patients the ability to compare and contrast prices for different medical services will allow them to shop between sites of care, eventually lowering costs across the board.
In 2020, the first Trump administration finalized price transparency rules requiring hospitals to publish payer-specific rates for common procedures in a consumer-friendly format, and for certain health plans to disclose in-network rates for covered items and services, along with allowed amounts for, and billed charges from, out-of-network providers.
However, enforcement fell by the wayside during the Biden administration, according to Republican lawmakers, government watchdogs and price transparency advocates.
As a result, compliance remains relatively low. Only about 21% of hospitals, for example, share full pricing files online as of November.
The original rules required health plans to publish historical net prices for prescription drugs. However, the departments delayed enforcement of those provisions after lawsuits were filed against the rules, including the PCMA’s.
The PBM lobby argued that forcing plans to disclose net prices would lead to pharmaceutical companies reducing their drug discounts if they learned that competitors may have given less drastic price concessions.
PBM critics say that the industry doesn’t want additional transparency because it could undermine their ability to negotiate, potentially cutting into profits.
And, forcing PBMs to share more information on how they negotiate discounts and the scale of those savings could help employers and health plans chose the best partner to administer their drug benefits, injecting more competition into the sector, according to experts.
Research is scarce on the impact of price transparency on drug costs overall, according to Fiedler.
But “my suspicion is that the direct effects of disclosing this information on how these markets function may not be that large,” he said.
The PCMA dropped its lawsuit in 2021 after the Biden administration agreed to allow PBMs to report rebate information to the federal government, but not have to share it publicly.
But making more cost information, especially about prescription drugs, “widely and easily available will ultimately foster a more competitive, innovative, affordable, and higher quality healthcare system,” the HHS and Labor and Treasury departments wrote in the May RFI.
Along with the RFI, the CMS updated its price transparency guidance for hospitals, requiring them to list actual dollar amounts for services, instead of estimates or other figures, whenever possible.
The agency also directed payers to update how they report rates for covered items and services — including for covered prescription drugs.
The Trump administration plans to release a full blueprint for how plans should release this information in October. Enforcement is slated to begin in February.
Oz suggests PBMs should nix rebates
Oz also said Tuesday that he hopes PBMs will become more transparent voluntarily, and cut back on controversial business practices like retaining rebates they negotiate with drugmakers instead of passing those savings through to health plan and employer clients.
“There’s a possibility that we have a window now where the three big PBMs might actually consider doing away with the rebate-slash-kickback system,” Oz said. “And before we start passing the rules and laws to try to do it, which we can do fairly expeditiously because there’s a motivated group of people who want to do that, it might be worth giving them one last chance to fix it on their own.”
Oz pointed to a similar pledge that the Trump administration recently secured from health insurers to reform prior authorization processes that providers say contribute to burnout and impede patient care.
The announcement Monday was met with cautious optimism by providers and patient advocates, who said its long-term efficacy will largely depend on whether insurers actually decide to follow through on the commitments give they are, at the moment, entirely voluntary.
It’s unlikely that the Big Three PBMs will take any steps that could cut into their bottom lines without the government requiring them to — or without finding another area of the pharmaceutical supply chain to mine for profits to make up the difference, said Ted Okon, executive director of advocacy group the Community Oncology Alliance, at the Transparency Rx event.
“It’s all whack-a-mole,” Okon said.
“I think it’s very unlikely rebates are going away,” Fiedler agreed. “And if they go away, they’ll be replaced with some other type of discount that serves a similar function … The chances that the industry decides to do away with this unilaterally are basically nil.”
