Lowering Prices for Patients by Eliminating Kickbacks to Middlemen

This executive order directs HHS to complete a rulemaking that would eliminate safe harbor protections under the anti-kickback statute for prescription drug rebates paid to pharmacy benefit managers (PBMs) and insurers in Medicare Part D, instead requiring discounts to be applied at the point-of-sale to reduce patient out-of-pocket costs. The Secretary must first confirm that any action would not increase federal spending, Medicare premiums, or total patient out-of-pocket costs.

Federal Register Open PDF 85 FR 45759

Impact dates

Date TBD
Confirmation that action won't increase spending/premiums/out-of-pocket costs before taking Section 3 action
Date TBD
HHS Secretary to complete rulemaking process commenced prior to EO

Key directives

HHS Secretary shall complete rulemaking to exclude certain retrospective price reductions from anti-kickback safe harbor protections
HHS shall establish new safe harbors for point-of-sale discounts and bona fide PBM service fees
HHS Secretary must confirm and publicly disclose that actions under Section 3 won't increase federal spending, Medicare beneficiary premiums, or patients' total out-of-pocket costs

Who is ordered

Secretary of Health and Human Services · Department of Health and Human Services

Timeline

Immediate

EO directs HHS Secretary to continue and complete existing rulemaking on anti-kickback safe harbors

Near term (90d)

HHS must confirm and publicly state that rulemaking changes won't increase federal spending, Medicare premiums, or total patient out-of-pocket costs before taking action

Long term

Potential restructuring of Medicare Part D rebate system if rulemaking completed; possible shift of tens of billions in rebates from PBMs/insurers to patients at point-of-sale

Risks & tensions

Rulemaking was already 'commenced' before EO—EO accelerates/completes rather than initiates; actual timeline uncertain
Condition in Section 4 creates significant barrier: if actuarial analysis shows premium increases, action may be blocked
PBMs and insurers may raise premiums or reduce benefits to offset lost rebate revenue, making Section 4 confirmation politically/technically difficult
Safe harbor changes face legal challenge risk under Administrative Procedure Act and potential 'arbitrary and capricious' review
EO text vague on whether 'commenced' rulemaking refers to specific proposed rule; actual implementation timeline unclear