HHS Safe Harbor For Value-Based Drug Contracts May Be On Horizon
Executive Summary
US proposed rule establishing new safe harbors from anti-kickback rules for value-based and outcomes-based contracts limits protections to clinicians, providers and certain other groups and expressly excludes pharmaceutical manufacturers. But HHS suggests a separate safe harbor for prescription drug contracts may be forthcoming.
A safe harbor from the federal Anti-Kickback Statute to protect value-based arrangements involving prescription drugs may be in the works at the US Health and Human Services Department’s Office of Inspector General, according to a proposed rule released 9 October.
The proposal lays out new anti-kickback safe harbors covering value-based and outcomes-based arrangements involving health care providers but specifically excludes pharma manufacturers (as well as medical device companies and labs) from the protections, denying earlier requests from drug firms.
Instead, OIG says it may “consider specifically tailored safe harbor protection for value-based contracting and outcomes-based contracting for the purchase of pharmaceutical products (and potentially other types of products) in future rulemaking.” The OIG proposed rule was released along with a companion proposal from the Centers for Medicare and Medicaid Services addressing prohibitions on physicians referring patients to other businesses they own, known as the"Stark" law.
Manufacturers have been seeking a safe harbor from anti-kickback laws for value-based arrangements for years. (Also see "Value-Based Contracts Getting More Safe Harbor Attention From OIG" - Pink Sheet, 10 Dec, 2017.) The anti-kickback statute is a federal criminal law that prohibits the exchange of, or the offer to exchange, anything of value with the intent to influence the use of products or services paid for by federal health care programs like Medicare or Medicaid.
It is designed to broadly protect the government, patients, health plans, and other stakeholders from fraud and abuse, but the law is vague and existing safe harbors relevant to manufacturers were created prior to the implementation of Medicare Part D in 2006.
Explaining its decision to exclude drug firms from the proposal, OIG says: “On the basis of our historical enforcement and oversight experience, we are concerned that some companies within these types of entities, which are heavily dependent upon practitioner prescriptions and referrals, might misuse the proposed safe harbors primarily as a means of offering remuneration to practitioners and patients to market their products, rather than as a means to create value for patients and payers by improving the coordination and management of patient care.”
OIG said value-based participants would "broadly" include "clinicians, providers and suppliers," as well as other entities such as pharmacies and disease management companies. However, it is also considering specifically excluding pharmacy benefit managers, wholesalers and distributors from the safe harbor “for reasons comparable to those for excluding pharmaceutical manufacturers.”
And it is proposing the safe harbor would not cover “any remuneration funded by, or otherwise resulting from the contributions of, an individual or entity outside" of the value-based arrangement to discourage pharma companies from trying to circumvent their exclusion.
Pharmaceutical manufacturers “are less likely to be on the front line of care coordination and treatment decisions in the same way as other types of proposed [value-based] entities, such as hospitals, physicians, and remote monitoring companies that provide care coordination,” the proposal points out.
Nevertheless, OIG requests comments on “whether this assumption is correct, along with examples of the specific roles played by these entities in coordinating and managing care for patients.”
OIG acknowledges that pharma manufacturers “may help facilitate care coordination and management of care through, for example, data analytics associated with their pharmaceutical products furnished to purchasers of their products.” These kinds of arrangements raise “different program integrity issues…and would likely require different safeguards,” OIG points out.
The office says it is considering manufacturers’ role in coordination and management of care and “may address it in future rulemaking.”
Medication Adherence And Warranty Bundles
Pharma manufacturers would be eligible for protection for some other practices under modifications to the warranties safe harbor in the proposed rule. OIG proposes to revise the safe harbor to protect bundled warranties for one or more items and related services.
The modification would allow manufacturers and suppliers to warrant that a bundle of one or more items with services, such as product support services, “will meet a specified level of performance under a warranty agreement,” the proposal explains.
OIG warns it is “mindful” that certain services such as medication adherence programs, could “increase the risk of patient harm and inappropriate utilization items or services.” As a result, the office is considering safeguards such as prohibiting direct outreach to patients by a seller offering a warranty but allowing an intermediary to conduct direct outreach as long as the intermediary’s compensation was not tied to volume or the value of any warranted item used.
OIG also asks for comments on potential revisions to the reporting requirements in the warranties safe harbor that could accommodate outcomes-based warranty arrangements that manufacturers and suppliers may want to undertake.
Stakeholders have expressed concern that the reporting requirements under the safe harbor may not allow for outcomes-based warranty arrangements in which buyers could receive return payments from manufacturers over several years if a therapy does not meet clinical outcomes at designated points in time, the proposed rule notes.