Legal Insights and Perspectives for the Healthcare Industry

Daniel Levinson, the HHS Inspector General (IG), tendered his resignation to President Donald Trump on April 2, effective May 31. Mr. Levinson was the longest serving HHS-IG and under his leadership, the watchdog managed a wide array of oversight, including checks on the implementation of the Affordable Care Act. The HHS-OIG is the largest inspector general office among federal agencies helping to police over 200 HHS programs as well as the massive Medicare and Medicaid programs. The current Principal Deputy Inspector General Joanne Chiedi will become the acting IG on June 1.

Undoubtedly the next HHS-IG appointee will be a staunch advocate of fraud and abuse enforcement, and likely will have years of government audit or enforcement experience, as was the case with previous HHS IGs. It remains to be seen, however, if the appointee will also have private industry experience and will bring to bear deep knowledge of an evolving healthcare delivery system.

Emerging as an industry disrupter, the Office of Inspector General for the US Department of Health and Human Services (OIG) has waded knee-deep into health policy and economics in proposing dramatic changes to the anti-kickback discount safe harbor protection. Its latest move targets certain industry sectors, proposing to remove their protection from administrative and criminal prosecution in connection with rebates and price reductions for prescription drugs.

Under the proposed rule issued February 6, the OIG proposes to amend the language of the existing discount safe harbor to no longer protect price reductions from prescription drug manufacturers to sponsors, MA plans, or Medicaid managed care organizations (MCOs), or to pharmacy benefit managers (PBMs) under contract with those entities, in connection with the sale or purchase of prescription drugs (unless the price reduction is otherwise required by law). The proposal is elegant and simply excludes from the definition of a “discount” price reductions or other remuneration paid from a drug manufacturer to sponsors and MA plans, Medicaid MCOs, and PBMs. If a price reduction is not a discount, it is not excepted or protected and can be subject to enforcement. No other health industry sector is apparently targeted for this administrative rule change. 

US President Donald Trump signed the SUPPORT Act into law on October 24, 2018, in a culmination of a two-year bipartisan effort by lawmakers across multiple committees in both the House and Senate. Law360 published an article on October 25, 2018, by the Morgan Lewis healthcare team that takes a first look at the sweeping new opioid law.