A new US Department of Health and Human Services (HHS) proposal to curb rebates will increase biosimilar competitiveness, and positively impact low-cost and generic alternatives in the hepatitis C (HCV) and diabetes spaces, experts said. The latter are currently given lower formulary priority compared to high-cost branded alternatives in Medicare Part D plans, they explained.
The HHS proposed a regulation on 31 January to exclude rebates on prescription drugs—paid by manufacturers to pharmacy benefit managers (PBMs), Part D plans and Medicaid managed care organizations—from safe harbor protection under the anti-kickback statute. The proposal in turn would lower the incentive to prioritize high-cost drugs on a formulary. Safe harbor regulations cover payments and business practices that potentially implicate the anti-kickback statute, but are not treated as offenses under the law. The HHS announcement was followed by the proposal publication on 6 February, which will remain open for comment until 8 April.
While one analyst report viewed the implementation of the proposed rule in its current form as unlikely, experts predicted this rule, if finalized, to increase uptake of low-cost alternatives in the diabetes, HCV and respiratory spaces where there is a higher prevalence of high-cost drugs. The proposal will encourage patient co-insurance calculations to rely on a drug’s net price—the cost after deducting discounts and rebates—instead of a drug’s list price, and likely place currently deprioritized drugs in a competitive field.
Patient premiums may rise in response to these changes, but experts did not anticipate them to be substantial since they would be spread across beneficiaries, and those with higher healthcare costs can benefit the most.
The aforementioned analyst report expected the industry to accept some sort of proposal along the lines of the one described above, from a Republican administration. Companies like AbbVie (NASDAQ:ABBV), Johnson & Johnson (NYSE:JNJ), Sanofi (EPA:SAN) and Amgen (NASDAQ:AMGN) could be negatively impacted, since some like AbbVie have used rebates to retain preferred formulary positions, the report said.