On June 1, Joanne Chiedi assumed the role of Acting Inspector General at the U.S. Department of Health and Human Services following the departure of Daniel R. Levinson. In a recent interview with Law360, Chiedi spoke of her vision of her role as acting inspector general and upcoming enforcement activity at HHS. While she declined to provide many details, she did suggest that she would continue to present an aggressive posture on enforcement, particularly in regard to kickbacks.
Chiedi, who served as Levinson’s second-in-command for 6 years, noted her “synergy” with Levinson, and promised “assertive leadership,” while further remarking that her vision “…will continue to be aggressive.” Per the interview, Chiedi doesn’t just see herself in a caretaker role, and isn’t waiting for a formal nomination for the Inspector General position before moving forward with OIG’s mission to protect both patients and the public’s resources.
Of primary interest to our readers, and as we discussed in our February 4 alert, “HHS Proposed Rule Targets PBM and Insurer Rebates in Fight to Lower Drug Prices,” HHS has drafted new regulations designed to restrict the use of rebates, including revisiting the safe harbor under the Anti-Kickback statute for drug rebates. Though Chiedi declined to comment on the rule during the course of the interview, given her statements regarding an aggressive enforcement posture, it would seem reasonable to expect that PBMs and others should be preparing for the disappearance of the safe harbor.
The rule changes, initially proposed on January 31, are designed to lower prescription drug prices and out-of-pocket costs for Medicare Part D beneficiaries by eliminating the Anti-Kickback safe harbor for rebates paid to Part D plans, Medicaid managed care organizations, and pharmacy benefit managers (PBMs). The rule proposes that manufacturers instead pass cost-savings directly to patients with transparent drug pricing at the point of sale, creating a new safe harbor that excludes the middleman. The proposal also creates a safe harbor for fixed fee service arrangements between manufacturers and PBMs. OIG has now forwarded the new regulations on to the White House for review, and under Chiedi’s leadership, the rules are on schedule to be finalized by November 2019.
The FisherBroyles Pharmacy and Health Care Law team is pleased to keep you updated on events of interest to those in the healthcare, medical device, and pharmaceutical industries. Questions may be directed to any of the following attorneys: