Lowering Prices for Patients by Eliminating Kickbacks to Middlemen
The order directs the Secretary of Health and Human Services to complete a pending rulemaking that would strip anti-kickback-law safe-harbor protection from drug rebates paid to insurers and pharmacy benefit managers in Medicare Part D — redirecting those discounts to patients at the pharmacy counter.
Requires the Secretary to publicly certify the rule change will not raise federal spending, Medicare premiums, or patient out-of-pocket costs before finalizing it, placing a precondition on an action that the order estimates could save Medicare patients tens of billions of dollars.
What this order does
What it orders
The order directs the Secretary of Health and Human Services to complete a rulemaking already underway that would do two things: first, remove safe-harbor protection under the federal anti-kickback statute for retrospective drug-price rebates that manufacturers pay to health plan sponsors, pharmacies, or pharmacy benefit managers (PBMs) in Medicare Part D when those discounts are not passed to patients at the point of sale; and second, create new safe harbors allowing those discounts to be applied directly at the patient's point of sale and permitting certain legitimate PBM service fees.
Before finalizing the rulemaking, the Secretary must publicly confirm that the changes will not increase federal spending, Medicare beneficiary premiums, or patients' total out-of-pocket costs. The order does not itself amend the anti-kickback safe harbor — that change depends on completion of the formal rulemaking process. Standard provisions clarify the order creates no enforceable legal rights and is subject to appropriations.
Who it affects
Medicare Part D beneficiaries whose cost-sharing is currently based on list prices rather than negotiated prices, health plan sponsors, pharmacies, and pharmacy benefit managers (PBMs) whose rebate arrangements may lose safe-harbor protection, and drug manufacturers that pay those rebates.
Why it matters
Medicare Part D patients could see immediate savings at the pharmacy counter if rebates previously collected by insurers and PBMs are redirected to them as point-of-sale discounts. The order estimates the change could save patients hundreds to thousands of dollars per year on high-cost prescriptions.
What must happen and when
How the order is supposed to work
The order triggers a two-step sequence: HHS must first run a public confirmation analysis showing the rulemaking will not raise federal spending, beneficiary premiums, or total out-of-pocket costs, and publish that finding before acting. Only then can the Secretary finalize the rulemaking to narrow the safe harbor and create new point-of-sale discount protections. Because the change depends on formal notice-and-comment rulemaking, the order itself has no direct legal effect on the safe harbor — the operative change requires the completed rule.
Actions and deadlines
- Confirm publicly that the rulemaking will not increase federal spending, Medicare premiums, or patient out-of-pocket costs
- Complete the rulemaking to remove safe-harbor protection for non-point-of-sale drug rebates in Medicare Part D
- Establish new safe harbors for point-of-sale discounts and bona fide PBM service fees through rulemaking