Recent NHC Comments Submitted to HHS on Rebate Regulation Proposal

By: Eric Gascho, Vice President of Policy and Government Affairs

The National Health Council (NHC) submitted comments to the Department of Health and Human Services (HHS) on its proposal to amend the safe harbor regulation concerning rebates and other discounts.

The rule encourages drug manufactures to pass rebates directly to patients, instead of giving them to pharmacy benefit managers (PBMs). Under the current system, PBMs and Medicare plans typically negotiate rebates to save money, but patients’ out-of-pocket costs are not reduced as a result. In fact, in many cases the rebating process has been cited as a contributing factor to rising prices and patient cost sharing.

The NHC remains committed to ensuring access to affordable, high-value medications, so we are supportive of the Administration’s efforts aiming to reduce patient out-of-pocket costs. We agree with HHS’ premise that the rebating process is complex, opaque, poorly understood, and is likely one of many factors contributing to rising list prices and patient out-of-pocket expenses. Thus, the NHC supports the Administration’s proposal to eliminate the safe harbor protecting rebates between manufacturers and Part D plans and introduce a new safe harbor to protect discounts given to beneficiaries at the point of sale if patient safeguards are implemented alongside it to mitigate unintended consequences and ensure beneficiaries are the ultimate recipients of cost savings.

Last week, the NHC hosted a briefing for patient advocates and patient advocacy organizations on the proposed rule. We discussed our reaction to the proposal and held a panel featuring representatives from the Pharmaceutical Researchers and Manufacturers of America, the Pharmaceutical Care Management Association, America’s Health Insurance Plans, and Walgreen Co.

During the panel, which was moderated by the NHC’s Chief Executive Officer Marc Boutin, Boutin expressed that the NHC will continue to facilitate conversations on this subject with stakeholders across the health care sector so to ensure patients benefit from changes that are made.

Because the proposed rebate rule change is dramatic, and implementation by 2020 comes with the potential for unintended consequences, the NHC’s comment letter includes specific recommendations to ensure patients are protected:

• Call on Congress to change the Part D benefit structure by placing a cap on out-of-pocket costs for patients;
• Engage in a more comprehensive review of formulary adequacy;
• Clarify the definition of negotiated price and adjust Part D benefit design parameters accordingly;
• Take extra steps to ensure optimal transparency for patients using Plan Finder;
• Ensure pharmacies are fully reimbursed for Part D medications in an appropriate timeframe;
• Ensure that value-based contracts are not hampered by the rule and its implications;
• Exclude Medicaid Managed Care Plans from its finalized changes to the anti-kickback statute.

Please read our comment letter, which goes into greater detail on all of our recommendations to HHS.