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US|May 07, 2019·07:57pm
The Trump administration’s point-of-sale rebate proposal would drastically alter the way rebates are delivered, and pharmacy benefit managers are angling for responsibility to distribute the rebates under the new model. PBMs have signaled they could sue the administration if they don’t like the way the final rebate rule is structured. Pharmacists, on the other hand, want an entity other than PBMs to fill the intermediary role between manufacturers and pharmacies.
Currently, PBMs pay pharmacies for drugs, then they get rebates from drug makers that are passed to plans, though PBMs often keep some of the rebates. Under the new rebate proposal, drug makers would pay the rebates, directly or indirectly, straight to the pharmacies. The HHS Office of Inspector General uses the term “chargeback” to describe these new payments, even though the word is already an established term of art for payments between manufacturers and wholesalers, said CiiTA Managing Director Jason Hardaway.
In comments to the administration, the PBM lobby made clear that it was strongly opposed to the point-of-sale rebate proposal and argued the government does not have authority to make the regulatory changes. However, if the proposal were implemented, the group wants changes that would let PBMs act as intermediaries to distribute the rebate payments to pharmacies.
The Pharmaceutical Care Management Association said PBMs are best suited to continue acting as middlemen if the new system is implemented. Funneling rebates to the point of sale would require a new payment system, and pharmacists would need more data than they currently use to calculate patient costs, the PBM lobby said. PCMA argued that PBMs already have the infrastructure to work with major health care systems, plans and pharmacies; they have the information necessary to inform point-of-sale price calculations for beneficiaries; and building a new model from scratch would be costly and time-consuming.
“Any new system will require significant development costs, and HHS should expect that to be accompanied either by new fees in the marketplace to offset them, or retained up-front discounts, for example,” the PBM lobby wrote.
PCMA drafted regulatory text for an alternative system that would put PBMs in charge of administering discounts at the point of sale and paying pharmacies negotiated prices based on drug Wholesale Acquisition Costs.
However, independent pharmacies have long distrusted pharmacy benefit managers, and the National Community Pharmacists Association wants another entity to fill the role.
“NCPA advocates for a Non-PBM Administered Model to remedy the nontransparent and biased environment that has misaligned incentives that hinder patient care in today’s healthcare system,” NCPA wrote.
There are other business entities including drug discount managers, switches, pharmacy services administrative organizations and third-party vendors waiting to pounce on a new business opportunity.
Legal Issues
PCMA has signaled it might sue the administration if it is not satisfied with the final rule. The group laid out a few legal arguments in its comments.
A key argument is that rebates are protected as a “discount or other reduction in price” under the text of the anti-kickback statute, and taking away regulatory safe harbors does not alter that underlying protection.
“I suspect that this will be a primary question if the final rule ends up in litigation,” said KPMG Principal Larry Kocot.
The PBMs also said the administration’s time estimates for implementation of the new “chargeback” model are too short and HHS did not consider possible ramifications of the proposal.
“These -- and other -- estimates are so far divorced from the reality of what is and will occur that it truly begs the question of whether any thought was put into these figures,” the group wrote.
Kocot said the issues with accuracy of the estimates could be fixed in the final rule.
“[Administration officials] recognize the risks of litigation on major regulatory changes, so I am sure they will be circumspect in developing a solid administrative record to support any final actions they take with the final rule,” Kocot said.
Tom Bulleit, a partner at Ropes & Gray, said he thought the PBMs’ arguments have a chance of holding up in court, if the group chooses to sue.
“I give the PBMs a better than a 50/50 chance of getting an injunction … and ultimately prevailing in the inevitably following administrative procedure act litigation,” Bulleit said. -- Rachel Cohrs (rcohrs@iwpnews.com)
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