AET/CVS and ESRX/CI: Trump’s Drug Pricing Speech To Target Rebates, Unlikely to Impact PBM-Insurer Deals

Event Driven Takeaways

  • During a press call on the evening of May 10, a senior administration official touted President Trump’s FY19 budget, which calls for reform in areas such as drug rebates, formularies, and out-of-pocket spending caps.
  • However, the Trump Administration’s comments about PBMs are mostly a cover for rebate reform, rather than a signal of opposition against insurer-PBM consolidation, according to a Capitol Hill source familiar with the proposed transactions.
  • Tim Greaney, a law professor at UC Hastings who previously worked at the DOJ, told Event Driven that high market concentration among PBMs is contributing to the “lack of industry transparency and flawed rebate formulas.”

The Trump Administration’s focus on pharmaceutical prices may stoke reform on industry rebates, but it is expected to have limited impact on the pending Aetna/CVS and Express Scripts/Cigna deals. Yesterday evening, May 10, a senior administration official said during a press call that President Trump’s remarks today will build on the agenda outlined in the proposed FY19 budget. While the President