July 19, 2018

(Washington, D.C.) — Pharmaceutical Care Management Association (PCMA) President and CEO Mark Merritt released the following statement on the new Health and Human Services (HHS) proposal pending at the Office of Management and Budget (OMB): “Removal Of Safe Harbor Protection for Rebates to Plans or PBMs Involving Prescription Pharmaceuticals and Creation of New Safe Harbor Protection”:

“While we will await the Administration’s expected proposal to re-examine the Anti-Kickback and Medicare Part D statutes as they relate to rebates and safe harbors, we are immediately faced with several troubling questions. Before proceeding further with any proposed changes to the longstanding safe harbor protection for manufacturer rebates to pharmacy benefit managers (PBMs), we would encourage the Administration to review the extensive public comments PCMA and other payer-oriented groups submitted just a few days ago in response to HHS’s Blueprint Request for Information (RFI) on this very issue.

  • First, would removing or limiting safe harbor protections actually reduce drug prices? The short answer is, noA recent Medicare report by HHS’ Office of Inspector General (OIG) debunks the myth that drugmakers have somehow been compelled to raise prices because of the rebates health plans and PBMs negotiate to reduce overall costs. In fact, some of the highest priced drugs are found in a different program, Medicare Part B, where neither PBMs nor rebates play any meaningful role.
  • Second, would it result in higher or lower costs to Medicare and the enrollees it serves? According to a recent study by Oliver Wyman Consulting, commissioned by PCMA, rebates have reduced costs in Medicare Part D by $34.9 billion and eliminating them would cause Part D premiums to rise by 52 percent in 2018 alone. As a cautionary note, a recent high profile proposal to require point-of-sale rebates in Medicare was initially touted as a “cost saver” until government actuaries concluded it would actually increase costs by $43 billion.
  • Third, will Administration actuaries provide the required rigorous economic impact analysis to any changes to safe harbors before proceeding further? The impact of the proposal must be examined thoroughly before proceeding further given that OMB has stated the proposal is “economically significant.”
  • Fourth, is HHS authorized to change the safe harbors through regulation? The statutory exception for discounts to the Anti-Kickback statute protects rebates and any changes would require an act of Congress. In addition, a legal analysis, included in PCMA’s comments on the Blueprint, raises significant concerns as to whether there are any viable alternatives to rebates, in light of  drug manufacturers’ inability to offer upfront discounts under current antitrust case law.”