Health Law Daily New safe harbors aim to reduce prescription drug prices
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Monday, November 30, 2020

New safe harbors aim to reduce prescription drug prices

By Rebecca Mayo, J.D.

A new final rule changes the way some prescription drug discounts are treated under the safe harbor provisions to the Anti-Kickback Statute.

As part of the ongoing effort to reduce prescription drug prices and make drug pricing systems more transparent, HHS Office of Inspector General (OIG) released a new final rule. Under the new rule price reductions from prescription drug manufacturers to plan sponsors under Medicare Part D or pharmacy benefit managers (PBMs) under contract with them, no longer fall under the existing discount safe harbor. However, two new safe harbors are added to protect certain point-of-sale reductions in price and certain PBM service fees (Final rule, 85 FR 76666, November 30, 2020).

Safe harbors. The rule modifies discount safe harbor to exclude all price reductions from manufacturers on prescription pharmaceutical products in connection with their sale to or purchase by plan sponsors under Medicare Part D, Medicaid Managed Care Organizations (MCOs), or PBMs acting under contract with plan sponsors under Medicare Part D or Medicaid MCOs, unless the reduction in price is required by law. The reductions in price negotiated between manufacturers and plan sponsors under Part D in the form of upfront discounts, will be eligible for protection under the new safe harbor for point-of-sale reductions in price for prescription pharmaceutical products.

The rule adds a new safe harbor to protect reductions in price between the entities that would be removed from the discount safe harbor if such reductions in price are given at the point of sale and meet certain other criteria. This would protect reductions in price on prescription pharmaceutical products offered to plan sponsors under Medicare Part D, Medicaid MCOs or through a PBM acting under contract with either if the reduction in price is set in advance, does not involve a rebate, and completely reflects the price the pharmacy charges to the beneficiary at the point of sale.

A second new safe harbor was added to protect certain fees a pharmaceutical manufacturer pays to a PBM for services rendered to the manufacturer that relate to the PBM’s arrangements to provide pharmacy benefit management services to health plans. To receive protection under this safe harbor, the services and compensation must be set out in a written agreement, the compensation must be a fixed payment that is consistent with fair market value, and the PBM must make annual disclosures to any health plans it enters into contracts with, regarding the services rendered to each pharmaceutical manufacturer related to the PBM’s arrangements to furnish pharmacy benefit management services to the health plan.

MainStory: TopStory FinalRules CMSNews AntikickbackNews CMPNews DrugBiologicNews FraudNews PrescriptionDrugNews

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