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HHS Delays Trump-Era Drug Rebate Rule to 2023 After Court Order

March 18, 2021, 9:04 PM

The HHS on Thursday delayed until 2023 a Trump administration rule that would have altered payments from drugmakers to pharmacy middlemen.

The postponement follows a court order that also holds litigation about the rule in abeyance pending a review by the Department of Health and Human Services.

A pharmacy liaison group argued the changes would significantly disrupt negotiations with drugmakers.

The rule (0936-AA08), which changes payments to pharmacy benefit managers such that they can’t fluctuate based on the price of a drug, was slated to take effect January 2022. Judge John D. Bates of the U.S. District Court for the District of Columbia placed parts of the rule on hold Jan. 30. His most recent March 15 order puts off the entire rule for almost two years.

Drug companies say the current system forces them to keep prices high because the middlemen—pharmacy benefit managers who help decide how a drug will be covered by insurance—demand high discounts to give products preferential treatment. The rule was slated to take effect Jan. 29 and had been delayed until March 22.

The goal of the Department of Health and Human Services’ rule was to give drug companies the opportunity to lower the prices they set for their products, but it wouldn’t have forced companies to do so.

This was one of two drug pricing rules the Biden administration had frozen. It was also among two other Trump-era rules the Government Accountability Office, a federal government watchdog, said violated the Congressional Review Act.

That law gives Congress the opportunity to pull back federal rules if they’ve not gone through the proper regulatory processes. It requires major rules take effect 60 days after publication in the Federal Register or after Congress receives them, whichever comes later.

The effective date of the rebate rule didn’t meet the 60-day delay requirement, according to the report.

To contact the reporter on this story: Jacquie Lee in Washington at jlee1@bloomberglaw.com

To contact the editors responsible for this story: Fawn Johnson at fjohnson@bloombergindustry.com; Alexis Kramer at akramer@bloomberglaw.com; Karl Hardy at khardy@bloomberglaw.com

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