HHS Removes Discount Safe Harbor; Adds POS PBM Fee Safe Harbors

Monday, December 14, 2020

On Nov. 20, 2020, the US Division of Well being and Human Providers finalized the proposed rule which altered the drug low cost protected harbor beneath the Anti-kickback Statute. The Proposed Rule was initially printed in Feb. 20, 2020, however was placed on maintain till President Trump’s July 24, 2020, Government Order directing the Secretary of Well being and Human Providers to finish the rulemaking course of.

The ultimate rule creates two new protected harbors for point-of-sale reductions in value and fee of PBM service charges by producers.

With regard to the purpose of sale low cost, the brand new protected harbor protects reductions in value on prescription pharmaceutical merchandise provided to plan sponsors beneath Medicare Half D, Medicaid MCOs, or via a PBM performing beneath contract with both if: (1) the discount in value is ready upfront; (2) the discount in value doesn’t contain a rebate, until the total worth of the value discount is completed via chargebacks or is a rebate required by legislation; and (3) the discount in value is totally mirrored within the value the pharmacy costs to the beneficiary on the level of sale. HHS was involved that many reductions don’t finally profit shoppers and that by requiring the discount on the beneficiary stage, the low cost would finally decrease the costs paid by shoppers.

The ultimate rule additionally added a protected harbor for charges paid by producers to PBMs. HHS acknowledged that PBMs usually present legit providers to manufactures that needs to be compensated. To qualify beneath the brand new protected harbor: (1) the providers and compensation should be set out in a written settlement; (2) the compensation should be according to truthful market worth in an arm’s-length transaction and be a set fee (i.e., not based mostly on a proportion of gross sales) and never be decided in a way that takes into consideration the quantity or worth of any referrals or enterprise in any other case generated between the events, or between the producer and the PBM’s well being plans; and (3) the PBM should make annual written disclosures to every well being plan with which it contracts concerning the providers rendered to every pharmaceutical producer associated to the PBM’s preparations to furnish pharmacy profit administration providers to the well being plan, and make such disclosures to the secretary upon request.

Each new protected harbors go into impact Jan. 29, 2021.

The ultimate rule additionally altered the low cost protected harbor to exclude manufactures of prescription pharmaceutical merchandise from the definition of low cost value reductions in reference to the sale to plan sponsors beneath Medicare Half D, Medicaid MCOS, and PBMs performing beneath contract with plan sponsors beneath Medicare Half D or Managed Medicaid. The rationale for the change was HHS’s concern that such rebates don’t finally profit both shoppers or the federal applications and, in some circumstances, these rebates inspired use of record costs which finally raises prices of the merchandise.

These adjustments to the present protected harbor, nevertheless, don’t turn into efficient till Jan. 1, 2022, to permit producers to restructure their agreements.