User:Rosalyndupton/sandbox

Prescription drug rebates are one of the many factors that drive up prescription drug prices in the U.S. In theory, prescription drug rebates should discount drug prices. However, rebates increase drug prices for reasons outside the scope of this article. HHS is currently trying to address the problem of drug rebates. HHS recently published a Proposed Rule in the Federal Register. 84 FR 2340. According to the Proposed Rule, HHS is attempting to “update the discount safe harbor to address the modern prescription drug distribution model and ensure safe harbor protections extend only to arrangements that present a low risk of harm to the Federal health care programs and beneficiaries.” 84 FR 2340. HHS has authority to update rebate safe harbors from several different statutes. First, the Anti-Kickback Statute specifically focuses on “kickbacks” (a type of healthcare fraud). 42 U.S.C. § 1320a-7b(b) (2018). Second, the HHS Secretary has authority under the Medicare and Medicaid Patient Protection Act to create safe harbors that shield pharmaceutical business practices from Anti-Kickback Statute liability. Medicare and Medicaid Patient and Program Protection Act of 1987, Pub. L. No. 100-93, 101 Stat. 697. Currently, prescription drug rebates are protected under a safe harbor HHS promulgated in 1991. 56 FR 35952. However, HHS is attempting to update this 1991 safe harbor. First, the Proposed Rule removes safe harbor protection for prescription drug rebates (effective January 1, 2020). HHS will only extend safe harbor status for rebates if the rebates are used to directly lower patients’ out-of-pocket coast at the point of sale. Though HHS expects this Proposed Rule to increase insurance premiums across the board, it also estimates that the Proposed Rule will lower patients’ out-of-pocket costs. Lowering out-of-pocket costs will mainly benefit insurance beneficiaries who have very high prescription drug costs.