Trump Drug Pricing Safe Harbor Rule Changes Delayed Following Lawsuit

On Wednesday, the Office of Inspector General and the Department of Health and Human Services (HHS) published a final rule in the Federal Register notifying the public of the rule’s court-order delayed effective date, which moved from Jan. 1, 2022 to Jan. 1, 2023. The agency’s Nov. 20, 2020, final rule made four changes to the regulatory safe harbors of the anti-kickback statute concerning prescription drug prices.

In particular, the eleventh-hour Trump Administration changes “transform[ed] the way prescription drugs are priced and paid for in the Medicare Part D program,” according to a lawsuit filed against the HHS over the new rules. The Pharmaceutical Care Management Association (PCMA) took issue with the alterations, calling them the product of a “herky-jerky, last-minute rulemaking process… that rests on flawed and widely rejected economic assumptions.”

The PCMA contended that the regulations were non-compliant with Administrative Procedure Act (APA) protocols, among other flaws. On Jan. 29, after the Biden Administration had transitioned to power, the parties stipulated to postpone the rule’s effective date for a year. The HHS explained that it did so because it was “the most efficient way to adjudicate this action while affording HHS an adequate opportunity to conduct a review of the entire November 20, 2020[] rule.” The parties also requested that the court hold the case in abeyance until the completion of HHS’s review.

The court subsequently granted the parties’ requested stipulation and asked them to submit a joint status report identifying whether and how the case should proceed by Apr. 1.

In the lawsuit, PCMA is represented by Gibson, Dunn & Crutcher LLP and the HHS by attorneys with the U.S. Department of Justice’s Civil Division.