With the release of the HHS safe harbor proposal, there is certainly more information available than when only the title was public. Indeed, over the past few weeks, many articles have been published with detailed summaries of the proposal.

Yet many questions remain. Here are some of the more granular items we have been considering:

  • How prepared is the market for a change of this magnitude? Many plans and PBMs have point-of-sale rebate capabilities, but is it scalable?
  • What is the mechanism for rebate sharing? We are assuming that the current discount will be applied to the cost of the drug, resulting in a lower negotiated cost at the point of sale, and a reduced cost share for the member.
  • How will point-of-sale rebate sharing impact a member’s TrOOP calculation? Will it count toward it, potentially resulting in more rapid progression through the benefit design phases (as with the coverage gap), or will it not, slowing the beneficiary’s progression?
  • What will happen in the coverage gap? Manufacturers already provide a mandated 70% rebate, so will the plan-negotiated discount be additive to that amount, resulting in a member cost share of less than zero, or will it apply after a 70% cost reduction, resulting in potentially reduced payments (from a pure dollar standpoint) for the manufacturer? In the first scenario, the manufacturer contribution could exceed 100%. This was arguably acceptable when the rebate was being distributed across all members through premium reduction. Is it still defensible when it is only applied to one beneficiary?
  • Finally, HHS commented in the proposal that safe harbor protection may not extend to practices (rebates) offered to commercial plans, when those same practices are not offered to Medicare/Medicaid. Additionally, the Trump administration has called on Congress to take action to ban rebates in the commercial space. How likely is that to occur, and how quickly could it happen?

Hopefully, some of the above issues will be elucidated during the comment period. Certainly it will be necessary to provide clarification quickly, with a targeted implementation date of January 1, 2020.