(CBS NEWS) -- Even with Medicare coverage, many seniors end up paying thousands of dollars for drug costs each year. Now, President Donald Trump has a plan for lowering drug costs for Medicare beneficiaries: allowing them to share in rebates that drug companies pay to insurers and middlemen, an administration official said.
A senior administration official outlined the plan Thursday on condition of anonymity ahead of the release of Trump's 2019 budget plan next week.
Pharmaceutical companies now pay rebates to insurers and pharmacy benefit managers to help their medications gain a bigger slice of the market.
Insurers apply savings from rebates to keep premiums more manageable.
Under Trump's proposal, seniors covered by Medicare's popular "Part D" prescription benefit would be able to share in the rebates for individual drugs that they purchase at the pharmacy.
Trump's budget would also expand Medicare's "catastrophic" drug benefit so that many seniors with very high costs would not face copayments. Seniors with high drug bills are currently still responsible for 5 percent of the cost of their medications. With some new drugs costing $100,000 a year or more, patient costs add up quickly.
The White House proposal would put Trump in the middle of a tug-of-war between drug companies on one side and insurers and pharmacy benefit managers on the other, with billions of dollars at stake.
Insurers and pharmacy benefit managers say the reason drug costs are so high is that drug companies are free to charge what the market will bear.
The pharmaceutical industry says middlemen are the problem, because they keep rebates paid by drug makers instead of passing them on to patients. Insurers counter that rebates are passed on in the form of lower monthly premiums for everybody.
The drug industry lobbying group, Pharmaceutical Research and Manufacturers of America, had no immediate reaction.