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New transparency requirements, loss of safe harbor for PBMs and drugmakers in proposed rule

By Robert King, Modern Healthcare on 2/7/2019

The Trump administration is calling for pharmacy benefit managers to disclose to health plans the fees that they get from drug companies for administrative services as part of a bid to boost transparency among PBMs. 

The fee transparency requirement is part of a proposed rule unveiled last week that also would eliminate anti-kickback statute safe harbor protections for drug rebates, while creating two new ones. 

The rule proposes to create a safe harbor for discounts provided at the point of sale at pharmacy counters and another for fees that drugmakers pay to PBMs for certain services. But the safe harbor for fees comes with new fee disclosure requirements for PBMs and insurance plans. 

"This safe harbor would protect only a pharmaceutical manufacturer's payment for those services that a PBM furnishes to the pharmaceutical manufacturer, and not for any services that the PBM may be providing to a health plan," the rule said. 

Examples of such services include PBMs providing data to drugmakers that the PBM has gathered from their health plan customers, such as data on side effects of a certain product. 

But the fees cannot be tied to list prices for drugs. Any compensation a drugmaker provides to a PBM must be "consistent with fair market value" and "be a fixed payment, not based on a percentage of sales," the rule said.

HHS is also proposing a new requirement that a PBM disclose any services it provides to pharmaceutical companies. Each year, a PBM must write to each health plan it contracts with to disclose the services and the associated costs, the rule said. "The department believes that PBMs are agents of the health plans with which they contract," the rule said. It added the new transparency requirement to ensure any deals with a drug company don't conflict with the services a PBM provides to a health plan.

HHS also wants to ask for additional information on the fee arrangements between drugmakers and PBMs upon request. 

The agency is also considering requiring PBMs to disclose such services and fees to HHS in order to get safe harbor protection. 

The rule is open for public comment until April 8. After the final rule is published, there will be a 60-day period to implement it.

PBMs have opposed the release of the rebate rule, saying that it doesn't do anything to stop drugmakers from raising list prices. 

"We are concerned … that eliminating the long-standing safe harbor protection for drug manufacturer rebates to PBMs would increase drug costs and force Medicare beneficiaries to pay higher premiums and out-of-pocket expenses, unless there is a viable alternative for PBMs to negotiate on behalf of beneficiaries," according to the Pharmaceutical Care Management Association, a PBM lobbying group.

The PBM AscellaHealth said that it believes that the business model it has today is pretty transparent. "We've got part of an open book on how we pay claims and the rebates we collect," President and CEO Dea Belazi said. "Folks have to understand that transparency of all PBMs should be fine."

But he said that PBMs will need to be charged fees for its services. "We have been in discussion with clients where the want everything passed down and we provide 100%, but the issue becomes they don't want to pay an administrative fee," he said.