US government formalises rebate ban proposal, but challenges await

Anybody expecting drug rebates in the Medicare programme to disappear at the beginning of 2020 might find themselves disappointed. The Centers for Medicare and Medicaid Services (CMS) yesterday published a proposed rule banning rebates from drugmakers to pharmacy benefit managers (PBMs) co-ordinating prescriptions for enrollees in Medicare part D plans. Still, the proposal looks likely to face a legal challenge from PBMs and insurers that could delay it past the proposed January 1, 2020 start date. And a long legal challenge could make the measures redundant by the time they come into force, as payment models are changing: PBMs have largely been absorbed into larger health insurers that are evolving their drug reimbursement contracts into “value-based” deals that seek to base payments on medical outcomes. Rebates have been permitted under the “safe harbour” provisions of anti-kickback laws, but now the CMS is proposing that safe harbour be withdrawn for rebate arrangements except for those given to beneficiaries at the point of sale. The CMS says it believes that the ban would also apply to commercial health plans.