On January 31, 2019, the U.S. Department of Health and Human Services Office of the Inspector General proposed a rule that would eliminate the long-standing safe harbor protection for prescription drug manufacturer rebates paid to Medicare Part D sponsors and pharmacy benefit managers. Under the proposed rule, manufacturer rebates paid to Part D plans would be protected by a new safe harbor only if the amount of the rebate was set in advance and used to reduce the price at the point of sale. The proposed rule would shift the risk dynamics among the beneficiaries, government, and manufacturers and affect how Part D plan sponsors make money, compete, and manage risk. This paper describes how the proposed rule may affect the Part D market.

This article was commissioned by PhRMA.