The Current Status of Safe Harbor Protection for Rebates: Is the End Near?


Wednesday, March 27, 4:30 – 5:30 pm


The Department of Health and Human Services (HHS) Office of Inspector General recently introduced a sweeping proposal that would eliminate safe harbor protections in the Anti-Kickback Statute for rebates offered by manufacturers to certain managed care organizations or their contracted pharmacy benefit management organizations (PBMs). If finalized, the rule would have a major impact on current drug supply chain transactions and could result in significant cost transfers in the Medicare and Medicaid programs.

Removal of safe harbor protection for rebates between pharmaceutical manufacturers and managed care organizations has previously been identified as a potential opportunity to increase discounts to patients at the point of sale by the Trump Administration. In announcing the recently released proposed rule, HHS Secretary Alex Azar described it as: “the single biggest change to the way Americans’ drugs are priced at the pharmacy counter, ever.”

As stakeholders debate the relative merits of the proposal, there remains significant controversy on the anticipated impact of the rule. Will manufacturers lower their list prices in response to the rule?
How will price concessions be implemented by managed care organizations, including PBMs and health plans? How will the proposal impact the Medicare Part D program, the Medicaid program, and commercial markets?

This session will provide an up-to-date summary of this important issue and what managed care organizations can expect in the near future.

Learning Objectives:
At the completion of this activity, participants should be able to:

1. Describe the rationale for removal of safe harbor protection of rebates under the Anti-Kickback Statute.
2. Summarize the impact of the proposal to remove safe harbor protection for managed care organizations.
3. Describe vulnerabilities to Medicare Part D, Medicaid, and the commercial markets in the proposed rule and what a legal challenge might look like.


Ross D. Margulies, JD, MPH
Senior Associate
Foley Hoag LLP
Washington, District of Columbia

Please note: this session is not eligible for continuing pharmacy education credit.