July 28, 2021

Volume XI, Number 209

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Trump Administration Withdraws Proposed Rebate Rule

In an unexpected turn of events, the Trump administration has apparently reversed course and has withdrawn the proposed rule that would have amended the discount safe harbor under the Anti-Kickback Statute to eliminate protections for certain drug rebates paid by pharmaceutical manufacturers. “Based on careful analysis and thorough consideration, the president has decided to withdraw the rebate rule. The Trump administration is encouraged by continuing bipartisan conversations about legislation to reduce outrageous drug costs imposed on the American people, and President Trump will consider using any and all tools to ensure that prescription drug costs will continue to decline," White House Deputy Press Secretary Judd Deere said in a statement.

As we reported back in February, in addition to the removal of the safe harbor protections, the proposed rule would have created two new safe harbors to protect: (i) certain point-of-sale discounts on prescription pharmaceutical products; and (ii) certain fixed fee service arrangements between manufacturers and PBMs.

This latest move comes on the heels of the Congressional Budget Office’s estimate that implementing the proposed rule would have increased federal spending by about $177 billion over the next decade, where spending for Medicare would have increased by about $170 billion and spending for Medicaid by about $7 billion.

In June, the White House issued an executive order aimed at improving price and quality transparency in healthcare. Moreover, last week the president announced his intentions to deliver an executive order that would create a “favored nations” clause, where U.S. spending for drugs would be tied to prices paid by other countries.

In a statement, HHS spokesperson Caitlin Oakley said that “Secretary Azar is fighting alongside President Trump to lower prescription drug costs and protect America’s seniors." Needless to say, this has been a very busy week for the White House, and we anticipate continued movement in this space. We will continue to monitor closely and will track any further developments.

©1994-2021 Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. All Rights Reserved.National Law Review, Volume IX, Number 192
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About this Author

Susan Benson Health Attorney Mintz Law Firm
Member / Managing Member, DC Office; Chair, Health Law, Communications, Antitrust & ML Strategies Division

Susan’s clients depend on her in-depth industry knowledge and strategic insights. Her in-house experience informs her pragmatic, business-savvy counsel to health care industry clients. She regularly advises pharmaceutical services providers, managed care organizations, post-acute and long term care providers, and those who invest in the industry on the risks and potential benefits of strategic affiliations, complex service agreements, and due diligence in high profile transactions. She also provides counsel on government programs such as Medicare and Medicaid, and...

202-661-8715
Theresa Carnagie, Health Law Attorney, MIntz Levin Law Firm
Member

Theresa counsels health care clients on a variety of transactional, regulatory, and fraud and abuse matters.

Theresa focuses much of her practice on counseling health plans, pharmacy benefit managers, pharmacies, device manufacturers, and distributors on regulatory and compliance matters. Her practice extends to counseling on drug pricing and reimbursement issues, Medicare Advantage and Medicare Part D compliance, and the regulatory requirements under the Affordable Care Act and state health insurance exchanges. Theresa has extensive experience...

202-661-8710
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