Implications of proposed modifications related to pharmacy rebate safe harbors

In February, the Office of the Inspector General of the U.S. Department of Health and Human Services (HHS) released proposed modifications to safe harbor regulations in 42 CFR 100.952 (h) that protect pharmacy rebates from the federal anti-kickback statute.

The proposed update eliminates safe harbor protection for rebates provided by pharmaceutical manufacturers to Medicare Part D plan sponsors, Medicaid managed care organizations (MCOs), and pharmacy benefit managers (PBMs) acting under contract with either.

The proposed regulations do not explicitly affect the commercial market. The regulations also do not change the safe harbor with respect to drugs purchased through Medicare Part B fee-for-service plans, federal rebates collected for Medicaid MCO claims, or federal or supplemental rebates received directly by Medicaid state agencies.

As a potential replacement for removing the safe harbors, the regulation proposed new safe harbors for reductions in price reflected at the point of sale to the beneficiary. The proposed rule also outlines a protected structure for fixed service fees paid by manufacturers to PBMs.

In this paper, Milliman’s Christine Mytelka focuses on the potential implications of the proposal for state Medicaid agencies and the Children’s Health Insurance Program.

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