House Group Requests President Biden Fully Repeal Rebate Rule

A group of House Members, led by Representatives Scott Peters (D-CA) and Jared Golden (D-ME), sent a letter to President Biden calling for the President to use his executive authority to permanently cancel the prescription drug rebate rule delayed by the Inflation Reduction Act. Permanently canceling the rebate rule would restore the original intent of the Inflation Reduction Act, protect its intended long-term budgetary savings, and avoid increases in health care costs and Medicare premiums. 

The rebate rule in question was finalized by the Trump Administration in 2020 and then temporarily delayed several times – through a one-year delay implemented by the Biden Administration and several additional delays included in the Infrastructure Investment and Jobs Act, the Bipartisan Safer Communities Act, and the Inflation Reduction Act. In total, the legislative delays generated nearly $200 billion of offsets through 2031.

While the Inflation Reduction Act was initially intended to repeal the rule permanently, procedural obstacles led Congress to instead delay it only through the end of 2031. The Congressional letter calls on the White House to use its authority to make the repeal permanent. As it reads:

[T]o ensure the bill reduces long-term deficits to the degree originally intended, the Trump-era prescription drug rebate rule should be permanently repealed. This will ensure that it is not implemented in 2032 and cannot be used to offset additional spending in the future.

The original Inflation Reduction Act would have permanently prohibited implementation of the Rule Relating to Eliminating the Anti-Kick-Back Statute Safe Harbor Protection for Prescription Drug Rebates. This provision would have saved $122 billion through 2031 and, according to the nonpartisan Committee for a Responsible Federal Budget, more than $500 billion over two decades. However, due to Senate rules, full repeal of the rule could not be included in the Inflation Reduction Act. As a result, the decision was made to delay implementation of the rule instead.

While delaying implementation of the rule provides significant savings, long-term deficit reduction is substantially reduced absent full repeal. Your administration has the authority to fix this problem and achieve the full amount of long-term deficit reduction intended in the Inflation Reduction Act.

We ask that you restore the promise of the Inflation Reduction Act and begin the process of permanently revoking the rebate rule while investigating new ways to protect consumers at the pharmacy counter.

The Committee for a Responsible Federal Budget strongly agrees with this request and commends Representatives Peters, Golden, Blumenauer, Bourdeaux, Murphy, Panetta, Pappas, Rice, and Schrader for seeking to protect the long-term savings of the Inflation Reduction Act while preventing these savings from becoming a budget gimmick in the future.

Maya MacGuineas, president of the Committee for a Responsible Federal Budget, said in a statement: 

The rebate rule repeal was responsible for one-third of the second decade deficit reduction in the bill. Allowing the rule to return in 2032 would cost the federal government about $400 billion and drive up the cost of prescription drugs. It could also create a new slush fund that would allow even more deficit-financed spending this decade.

There is broad bipartisan support for preventing the rebate rule from coming into effect, and there is no good reason it should remain on the books. The White House should honor the original agreement and move to end the rebate rule permanently in order to fulfill the original intent of the Inflation Reduction Act.