In Inside Health Policy, Health Care Partner Discusses Expected Rule on PBM Drug Rebates and Safe Harbors

Health care partner Tom Bulleit (Washington, D.C.) was quoted in a Dec. 10 article published in Inside Health Policy on a proposed regulation that has been languishing at the U.S. Office of Management and Budget, entitled “Removal of Safe Harbor Protection for Rebates to Plans or PBMs Involving Prescription Pharmaceuticals and Creation of New Safe Harbor Protection.” Although little is known about the proposal except its title, past remarks from President Trump and U.S. Department of Health and Human Services Secretary Alex Azar suggest that the new regulation is likely to restrict manufacturer rebates to pharmacy benefit managers and health plans under the anti-kickback statue, but expand the potential for rebates to be “passed through” to end user beneficiaries with the aim of lowering patient out of pocket costs.

Mr. Bulleit’s remarks point to likely challenges to the proposed rule if it takes this form. He explains that if given the express protection in the anti-kickback statute for properly reported discounts, stakeholders who might be harmed by the regulation (most especially the PBM industry) would be likely to question the Administration’s authority to promulgate such a rule.

Mr. Bulleit suggests that if not modified in response to industry objections during the comment period, such a rule could be challenged in litigation.