CLSA in InsideHealthPolicy: IG Doesn’t Take Position On Anti-Kickback Exemptions For Drug Value-Based Contracts

By John Wilkerson | InsideHealthPolicy
June 22, 2018

The HHS Inspector General again did not take a position on drug makers’ requests to exempt value-based pay arrangements from anti-kickback law, according to the most recent semiannual report to Congress, even though the president’s plan to lower drug costs contemplates rewriting the law’s safe harbor guidelines. Some analysts believe the administration is still considering changes to those guidelines, though they are not sure of the direction HHS will take.

It’s a criminal offense to knowingly provide something of value to induce the purchase of items or services payable by a federal health care program. The law is broad, so the Inspector General writes guidelines that except certain activities, such as rebates.

The administration recently solicited input on separate ideas for using anti-kickback safe harbor guidelines to lower drug prices. One approach is to either limit or ban rebates, which the administration partially blames for rising list prices, by directing the HHS Office of Inspector General to either consider rebates kickbacks or limit rebates to a percentage of drug list prices.

“What incentives or regulatory changes (e.g., removing the discount safe harbor) could restrict the use of rebates and reduce the effect of rebates on list prices?” the request for information asks.

Conversely, HHS could expand safe harbors to include value-based pay arrangements.

“Are there particular sections of the Social Security Act (e.g., the antikickback statute), or other statutes and regulations that can be revised to assist with manufacturers’ and states’ adoption of value-based arrangements?” the administration asks.

Brand drug makers have been asking the Inspector General to add safe harbors for value-based contracts for some time. Drug makers consider the anti-kickback law and the Medicaid best-price policy two of the biggest regulatory obstacles to value-based contracts.

The Inspector General is reviewing 11 requests for safe harbors of value-based pay arrangements. Among the requests, brand drug makers want to include a wide range of services in the safe harbor, including services provided to patients, such as medication-adherence services; data analytics; waived out-of-pocket costs; and warranties and refunds for clinical and cost outcomes.

The Inspector General provided the same response to all 11 requests, just as it has did in its past semiannual report to Congress: “OIG is not adopting this suggestion at this time, as it requires further study. In the meantime, questions about the application of the anti-kickback statute to such arrangements should be addressed on a case-by-case basis, such as under the advisory opinion process.”

However, some analysts doubt that non-response indicates that the Inspector General, which is an independent body within HHS, is at odds with the administration. The Inspector General in January requested comments from stakeholders on “modifying and/or establishing safe harbor provisions.” In that request, the Inspector General included the safe harbor for value-based agreements as an idea worth considering.

Also, the Inspector General is averse to taking risks on safe harbor revisions, a brand drug lobbyist said, and agency staff typically wait until they think they have accounted for all unintended consequences before drafting new guidelines.

Brett Johnson, California Life Sciences Association’s senior director of policy and regulatory affairs, said the Inspector General’s report was probably written before the president released his plan to control drug costs.

“We suspect the Administration’s repeated statements regarding the reexamination of safe harbors indicates wheels are in motion towards some level of official action, though, given the potentially substantial impact of any such move, those wheels will no doubt continue to move rather deliberately,” Johnson said. “We do hope that safe harbors for value-based arrangements are also part of any such reexamination that occurs.” — John Wilkerson(