HHS Abandons Proposal to Reform Drug Manufacturer Rebate System

July 2019 ~

On July 11, the Department of Health and Human Services’ (HHS) announced its decision to withdraw its recent proposal to reform the drug manufacturer rebate system. The withdrawn proposal sought to modify the Anti-Kickback Statute safe harbor protection with the target of lowering prescription pharmaceutical product prices and out-of-pocket costs for consumers.

Initially, HHS anticipated the rule would encourage medication manufacturers to pass discounts directly to consumers and develop a transparent framework for the prescription drug product market.

“Based on careful analysis and thorough consideration, the President has decided to withdraw the rebate rule,” said the special assistant to the president and deputy press secretary. The administration “is encouraged by continuing bipartisan conversations about legislation to reduce outrageous drug costs imposed on the American people, and [the president] will consider using any and all tools to ensure that prescription drug costs will continue to decline.”

The administration states the decision to back away from the proposed rule is based on the prospects of bipartisan legislation aimed at reducing drug costs, as well a concern that the proposed rule would have imposed increased drug costs on seniors. In a May 2019 report, the Congressional Budget Office estimated that the proposed rule would increase federal spending by about $177 billion from 2020 to 2029, with increases in Medicare Part D plan premiums. HHS officially withdrew the notice of its pending final rule on July 10, 2019.

A spokesperson for the Department of Health and Human Services said, “Secretary Azar is fighting alongside [the president] to lower prescription drug costs and protect America’s seniors. [The president] and Secretary Azar are taking bold action to end foreign free-riding, examine how to safely import lower-cost prescription drugs, empower patients with meaningful transparency, and the list goes on.”

Source(s): National Law Review; Wall Street Journal; Healthcare Finance News;