CMS Proposes to Lower Drug Costs by Targeting “Backdoor Rebates” and Encouraging Direct Discounts to Patients

The Centers for Medicare & Medicaid Services (CMS) has released a proposed rule that would amend the safe harbor regulation concerning discounts, which are defined as certain conduct that is protected from liability under the Federal anti-kickback statute, Section 1128B(b) of the Social Security Act (the Act). The amendment would revise the discount safe harbor to explicitly exclude from the definition of a discount eligible for safe harbor protection certain reductions in price or other remuneration from a manufacturer of prescription pharmaceutical products to plan sponsors under Medicare Part D, Medicaid managed care organizations as defined under section 1903(m) of the Act (Medicaid MCOs), or pharmacy benefit managers (PBMs) under contract with them. The proposed rule would affect the operations of entities that are involved in the distribution and reimbursement of prescription drugs to Medicaid beneficiaries and Medicare Part D prescription drug benefit enrollees. Also, the proposed rule, if finalized, would affect Medicare prescription drug enrollees. CMS reports there were 44,491,003 Medicare prescription drug enrollees in December 2018.  For more details, see today’s first Financial Feature

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