July 16, 2019

July 16, 2019

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July 15, 2019

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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In an unexpected turn of events, the Trump administration has apparently reversed course and has withdrawn the proposed rule that would have amended the discount safe harbor under the Anti-Kickback Statute to eliminate protections for certain drug rebates paid by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.

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About this Author

Susan Berson, Public Health Service Attorney, Mintz Levin Law Firm
Member

Susan is Managing Member of the firm’s DC office, and she also serves on the firm’s Policy Committee. Her practice focuses on advising private and public health care service providers, including managed care organizations, pharmaceutical services providers such as PBMs, behavioral health companies, specialty care companies, and integrated delivery systems, often in the context of strategic affiliations and complex service agreements.

Susan has advised some of the nation’s largest government health programs and has negotiated some of the nation’s...

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

Theresa’s practice involves a variety of transactional, regulatory, and fraud and abuse matters.

Her transactional experience focuses on advising health care clients on joint ventures, mergers and acquisitions, service agreements, and corporate stock and asset acquisitions. She has served as corporate and regulatory counsel to retail pharmacy chains, pharmacy benefit managers, and health care providers in acquisitions, which included due diligence, licensing, change of ownership, Medicare and Medicaid state certification, and contracting. She has deep experience preparing and negotiating pharmacy network agreements, pharmaceutical purchase and distribution agreements, and rebate agreements.

She also advises health care clients on a variety of regulatory issues, such as Medicare compliance and reimbursement, federal and state anti-kickback and self-referral laws, and state regulatory issues, including corporate practice of medicine and fee-splitting prohibitions.

Theresa assists in the defense of clients subject to federal investigation for violation of the federal anti-kickback law and provides compliance advice to clients in structuring proposed transactions and business arrangements to comply with the anti-kickback and Stark fraud and abuse laws as well as other applicable state and federal regulatory requirements. Theresa has counseled a range of health care providers, including pharmacies, renal dialysis providers, physicians and physician groups, mental health providers, laboratories, hospital systems, practice management companies, and life sciences companies.

202-661-8710
Associate

Matt advises health care clients on regulatory and transactional matters, including fraud and abuse, HIPAA privacy and security, and general contracting.

Prior to joining Mintz, Matt worked as in-house counsel at an independent hospital and outpatient facility, where he provided guidance on a range of fraud and abuse issues, including compliance with the Stark Law, the Anti-Kickback Statute, and the False Claims Act. He also counseled on HIPAA privacy and security as well as other regulatory matters. Matt handled the structuring and negotiation...

202-434-7411