Coalition of State Rheumatology Organizations (CSRO)

2019-04-09 CSRO Comments on Safe Harbor Rules

CSRO Comments on Proposed Rule to Eliminate Safe Harbor Protections for Prescription Drug Rebates

Posted: April 8, 2019

The Coalition of State Rheumatology Organizations (CSRO) recently submitted comments on the Department of Health and Human Services (HHS) proposed rule amending the Federal anti-kickback statute.

The comments submitted to HHS explain why abolishing the current system of drug rebates used in Medicaid Part D and Medicaid Managed Care Plans is long overdue. Pharmacy Benefit Managers (PBMs) are receiving rebates from pharmaceutical manufacturers to obtain formulary placement and this practice is currently legal due to “safe harbor” protections in the anti-kickback statute. However, the proposed rule would remove the carve out in Federal statute that distinguishes rebates from kickbacks. CSRO maintains that recalibrating the current pharmaceutical supply chain is a necessary pre-requisite to better access and affordability.

CSRO’s letter included the following comments in support of the proposed regulation:

Rising out-of-pocket costs on prescription drugs cause undue financial burden on patients with rheumatic and musculoskeletal disease, often resulting in patients rationing their medications or abandoning treatment altogether;
Patients’ co-insurance expenses are often based on the list price of drugs, which is not reflective of the rebates PBMs receive, and therefore results in no benefit in reduction of out-of-pocket costs to the patient;
The rebate system often results in preferred formulary placement for more expensive drugs even when less expensive options are available;
Placement on formularies is currently not based on clinical effectiveness and is instead incentivized by what manufacturers offer the PBM in rebates;
The proposed rule would provide cost-savings for patients by banning “safe harbor” protections on rebates and discounts which has only benefited PBMs and insurers thus far; and
The current rebate system drives up list prices and acts as a potential barrier to lowering drug costs for patients (particularly for those in high-deductible plans).

CSRO and co-signed member organizations support stepping away from a rebate system that produces high list prices, reduces competition among manufacturers, and lacks transparency. Removing “safe harbor” protections for prescription drug rebates from the anti-kickback statute is a necessary step towards establishing a prescription drug supply chain that provides patients access to efficacious and affordable treatments.
You can view the full letter submitted to HHS by CSRO on the proposed regulations below.

Rebate Rule Comment Letter