Opinion: Rush to end drug rebates may be bad for patients, payers, and pharma

In health care circles, 21 words have rarely caused as much speculation as “Removal of Safe Harbor Protection for Rebates to Plans or PBMs Involving Prescription Pharmaceuticals and Creation of New Safe Harbor Protection,” the title of proposed regulations currently under review at the Office of Management and Budget.

Much of the buzz about the document’s content has centered on Department of Health and Human Services Secretary Alex Azar’s oft-mentioned complaint that rebates for prescription drugs contribute to high drug prices. Health plans, and their intermediaries known as pharmaceutical benefit managers (PBMs), negotiate with drug companies for rebate payments in return for covering their drugs.

Here’s how that works: Say a drug has a list price of $1,000. A health plan will tell a manufacturer that, unless it