Comments on Safe Harbor Proposed Regulations

NICA's Comments on Safe Harbor Proposed Regulations

On Monday, April 8, the National Infusion Center Association (NICA) submitted its comments on the Health and Human Services Office of Inspector General’s proposed rule relating to safe harbor protections for prescription drug price reductions.

Under the current rebate system and Federal anti-kickback statute safe harbor, rebate payments by pharmaceutical manufacturers to Pharmacy Benefit Managers (PBMs) and plan sponsors are not considered to be remunerations to induce the referral of business reimbursable under any of the Federal health care programs. The purpose of this proposed rule is to update the discount safe harbor to address the modern prescription drug distribution model and ensure safe harbor protections extend only to arrangements that present a low risk of harm to the Federal health care programs and beneficiaries. To this purpose, the Department proposes to make three changes to safe harbor protections:

(1) Amend the existing discount safe harbor by adding an explicit exception to the definition of “discount” such that certain price reductions on prescription pharmaceutical products from manufacturers to plan sponsors under Medicare Part D, and Medicaid MCOs would not be protected under the safe harbor;
(2) Add a new safe harbor (Point-of-Sale Reductions in Price for Prescription Pharmaceutical Products) to protect discounts between those same entities if such discounts are given at the point of sale and meet certain other criteria; and,
(3) Add a second new safe harbor (PBM Service Fees) specifically designed to protect certain fees pharmaceutical manufacturers pay to PBMs for beneficial services, when those services relate in some way to the PBMs’ arrangements to provide pharmacy benefit management services to health plans.

NICA submitted its comments in support of the proposed rebate reform measures for the following reasons:

• Under the current rebate system, rebates are not applied at the point of sale to offset the beneficiary’s cost share for prescription drugs;
• The current rebate framework may incentivize preferential formulary placement for higher-cost drugs that carry a higher associated rebate and may deter the placement of lower cost, therapeutically-equivalent drugs on formularies; and,
• Rebates have been ineffective and counterproductive in driving drug price reductions and the current rebate system works to the disadvantage of beneficiaries and Federal health care programs.

NICA supports efforts to expand access through improved affordability and transparency. We are concerned that once rebate-related revenue for PBMs and payers is reduced, these entities may explore other cost-management strategies focused on restricting access to care and provider choice (e.g., restrictive formularies limiting the number of drugs per category). As such, we urge the Department or Congress to establish clear guidelines, guardrails, and protections that limit the ability of PBMs and plan sponsors under Medicare Part D, Medicare Part B, and Medicaid MCOs to further restrict provider choice and patients’ access to care.

NICA concluded its comments to the Department by applauding its efforts to address the rising cost of drugs and patient-out-of-pocket costs. NICA supports several goals outlined in the proposed rule, so long as these reform measures do not inadvertently interrupt, restrict, or delay access to care. Because the extension of price reductions to consumers at the point of sale may make drugs more affordable, we encourage the Department to consider expanding the proposed rule to include safe harbor protections for point-of-sale price reductions on drugs covered under Medicare Part B as well.

Click here to read NICA’s full comments on the proposed rule.

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