NPC Submits Comments on HHS RFI Regarding the Anti-Kickback Statute and Beneficiary Inducements CMP

October 26, 2018

The Honorable Daniel R. Levinson
Inspector General
Department of Health and Human Services
330 Independence Avenue SW, Room 5513
Washington, DC 20201

RE: Request for Information Regarding the Anti-Kickback Statute and Beneficiary Inducements CMP

Submitted electronically via:


Dear Mr. Levinson:

The National Pharmaceutical Council (NPC) shares your interest in transforming the health care system into one that better pays for value. With this in mind, NPC appreciates the U.S. Department of Health and Human Services (HHS) soliciting public comments on potential policy solutions to address regulatory provisions that may act as barriers to coordinated or value-based care. [1]

NPC is a health policy research organization dedicated to the advancement of good evidence and science, and to fostering an environment in the United States that supports medical innovation. NPC is supported by the major U.S. research-based biopharmaceutical companies. We focus on research development, information dissemination, education and communication of the critical issues of evidence, innovation and the value of medicines for patients. Our research helps inform critical health care policy debates and supports the achievement of the best patient outcomes in the most efficient way possible.

NPC welcomes this opportunity to provide input on potential policy considerations related to accelerating the transformation to a value-based system and removing existing barriers to care coordination and value-based care. In our comments below, we highlight key findings from several NPC studies on value-based contracting and patient cost-sharing. The primary goal of these comments is to provide additional context and references to evidence-based research that can help to support and inform agency decision-making.

  1. Promoting Care Coordination and Value-Based Care

NPC appreciates the agency’s willingness to consider proposed modifications or new safe harbors to the anti-kickback statute (AKS) in order to foster arrangements that promote care coordination and advance the delivery of value-based care.

Uncertainty surrounding the AKS can inhibit the advancement of value-based contracting

Currently, there is significant uncertainty surrounding how the anti-kickback statute (AKS) aligns with value-based contracting. [2] Our recent analysis of the potential regulatory barriers that impede value-based contracting found that “the federal AKS effectively prohibits manufacturers from utilizing risk management tools that could bolster patient outcomes and save money in federal health care programs. Manufacturers in value-based arrangements take on the risk for successful outcomes. For example, if a medication does not work for a patient, the manufacturer loses money, even if the failure is due to factors out of the manufacturer’s control. Manufacturers could institute programs aimed at giving the patient the best chance of successful treatment, including patient education, nurse coaching, case management support, benefit assistance, adverse event monitoring and more sophisticated outcomes monitoring. The current AKS, though, threatens large penalties for providing anything of value that could be seen as driving business toward a manufacturer.” [2]

The uncertainty associated with the federal AKS can inhibit uptake and advancement of these contracts as well as the transition from volume to value more generally. In our analysis, we explained that “the current regulation provides penalties large enough to inhibit manufacturers from engaging in anything that could be seen to fall under this statute. As noted above, examples of programs or activities that could be viewed as violating the AKS include patient education, nurse coaches, case management support, benefit assistance, adverse event monitoring and outcomes monitoring. These programs have benefits beyond value-based contracts, including improved intermediate outcomes that may increase long-term patient outcomes.” [2]

Given the potential for AKS to impede the transition to value-based reimbursement, we recommend that the application of AKS to value-based contracts should be clarified in a manner that supports the transition to value-based reimbursement. Furthermore, as the agency considers revising AKS, we recommend coordination with other federal regulatory agencies to address additional barriers to value-based health care delivery and reimbursement.

Uncertainty surrounding AKS may also inhibit sharing of economic models

As the agency considers modifying or creating new safe harbors to the AKS, it should also consider barriers to economic model sharing imposed and inhibited by the existing statute. As the U.S. health system continues to shift toward value-based care delivery and reimbursement, it’s important to recognize the barriers that impede the sharing of evidence and economic models between biopharmaceutical manufacturers and payers. In a recent survey conducted by NPC and Xcenda, 72% percent of payers found the projected budget impact of a therapy to be extremely or very important. In the near future, 90% percent of payers believe information on comparative cost effectiveness will be extremely or very impactful in their decision-making. However, the surveyed payers felt limited by the type and quality of information available when making formulary decisions.” [3]

However, decisions-makers are not often able to modify the assumptions in a cost-effectiveness model based on their covered populations and negotiated rates. This is in part due to concerns that “leave-behind models are of value and could be viewed as potentially inappropriate inducements or incentives to the entity receiving the model.” [4] Multi-stakeholder panels have suggested that safe harbors are needed to provide protection from allegations under the federal anti-kickback statutes. [4] This change would mirror other regulatory changes. For example, recently the Food and Drug Administration took an important step to encourage the exchange of better health care economic information, including cost-effectiveness information with sophisticated audience such as payers by issuing the final guidance “Drug and Device Communications with Payors, Formulary Committees, and Similar Entities — Questions and Answers. Guidance for Industry and Review Staff.” [5]

NPC encourages the agency to consider safe harbors to protect the sharing of cost-effectiveness models from allegations associated with kickback.

  1. Beneficiary Engagement

NPC supports the agency’s interest in exploring how relieving or eliminating beneficiary cost-sharing obligations might improve care delivery, enhance value-based arrangements, and promote quality of care.

Specific patient care scenarios in which cost-sharing obligations are particularly problematic

A wealth of existing research associates patient cost-sharing designs, including copays, coinsurance, and deductibles with the potential for both intended and unintended impacts on adherence, costs, and health outcomes. [6] Because cost-sharing is typically calculated based on tier placement rather than medical appropriateness, out-of-pocket (OOP) expenses can vary for patients with the same or similar condition. When lower-cost alternatives provide equal or greater benefits for all patients, treatment is straightforward. However, when higher-cost, higher-tier medications provide greater benefits for some patients, incentivizing beneficiary engagement through cost-sharing requires nuance. In our study “Does a One-Size-Fits-All Cost-Sharing Approach Incentivize Appropriate Medication Use? A Roundtable on Fairness and Ethics Associated with Variable Cost Sharing,” we explored examples of these patient scenarios. [6] We examined how “patients with the same or similar condition may need alternative treatments because of their genetic characteristics, comorbidities, or disease severity may need medications on different formulary tiers” associated with varying out-of-pocket (OOP) expenses and identified “when it is more (or less) acceptable to require patients with the same or similar condition to have different OOP expenses.”

To identify and discuss the trade-offs associated with variable cost sharing in pharmacy benefits, a multi-stakeholder roundtable of patient, payer, and employer representatives was convened. Roundtable participants reviewed an ethics framework, an actuarial analysis, a legal white paper, as well as other background materials and were asked to consider “when it would be more or less acceptable to require higher patient cost sharing; what is the optimal distribution of financial burden across patients, all plan members, and employers; and what are the existing barriers and potential solutions to align OOP costs with medically appropriate treatments.”

The roundtable identified five guiding principles in which cost-sharing obligations would be particularly problematic:

  1. If the initial lower-cost therapy is unsuccessful, patients should have access to higher-cost therapy and lower out-of-pocket costs.
  2. If there is high confidence the health benefits of a treatment are significant, then financial barriers should be lowered.
  3. If the treatment costs are balanced with better effectiveness and safety, then cost-sharing should be lower.
  4. If patients need higher-cost treatments based on their biology or genetics, then cost-sharing should be reduced.
  5. Cost-sharing differences incentivize trying lower-cost treatments, but big jumps in costs for patients should be avoided.  

Incorporating these principles in future policies related to benefit design may incentivize improvements in care delivery and promote more appropriate care for patients.

In addition, a recent analysis conducted by NPC and Dr. Mark Fendrick of the Value-Based Insurance Design (V-BID) Center at the University of Michigan further underscores the points above and outlines the need to acknowledge different levels of value for individual patients. [7] For example, certain patients cannot be prescribed (e.g. due to drug allergy or drug-drug interaction) or do not respond to first-line, lower cost medications. In these frequent clinical scenarios, an individual will require a substitute or an additional drug to achieve patient-centered clinical outcomes. This analysis found that “in these situations, the first-line drug is no longer high-value, and a clinically indicated, higher cost alternative becomes a higher value choice.  Therefore, the level of consumer cost-sharing for higher cost medication should be aligned with the clinical value — not solely the price — when lower cost alternatives do not produce the desired patient-centered outcomes.” [7]

In a subsequent analysis, we focused specifically on patient cost-sharing for specialty therapies. In the study Supporting Consumer Access to Specialty Medications Through Value-Based Insurance Design, we explain that “higher cost-sharing is associated with decreases in both essential and nonessential service use, which can have a negative impact on patient outcomes. [8] These effects may be particularly pronounced among those using specialty drugs, given the high cost-sharing for these medications. This analysis found that, “In applying V-BID to specialty medications, payers and purchasers can use a variety of techniques, including:

  • Imposing no more than modest cost-sharing on high-value medications;
  • Reducing cost-sharing based on patient- or disease-specific qualifications;
  • Selectively reducing cost-sharing for patients who fail to respond as desired to another medication based on current access restrictions used by insurance companies.”

It is also important to consider how cost-sharing obligations affect patients enrolled in high deductible health plans (HDHPs). Patients enrolled in HDHPs are responsible for the full cost of medical treatments and services until they meet their deductible and are consequently more likely to report going without or delaying medical care due to cost. [9] Furthermore, spending on chronic disease comprises a substantial majority of total U.S. health care expenditures. Thus, for many Americans, managing a chronic condition means paying higher out-of-pocket costs.

A recent analysis conducted by NPC and researchers from VBID Health considers how the current Internal Revenue Service (IRS) safe harbor for Health Savings Account (HSA) eligible HDHPs could be modified to include chronic disease medications. [9] The analysis found that providing pre-deductible coverage for medicines used to treat common chronic conditions could lower out-of-pocket costs and increase medication adherence for patients.

As the agency considers potential policies aimed at reducing or eliminating patient-cost sharing to improve care delivery and promote quality of care, we recommend that the agency pay particular attention to the specific patient care scenarios outlined above, as cost-sharing obligations for these populations are particularly problematic.

Unintended legislative barriers may prohibit certain methods of patient cost-sharing

As the agency evaluates policy proposals related to relieving or eliminating patient cost-sharing, it should also consider the ways in which existing legislation meant to protect patients from discriminatory cost-sharing practices may have unintended consequences in the evolution from volume to value. In a legal analysis of federal and state laws that impact the use of variable cost-sharing based on medical appropriateness, the authors identified a number of Federal laws which prohibit certain methods of lowering cost-sharing incentives for high-value care. [10]. For example, the authors note “the Genetic Information Nondiscrimination Act of 2008 (GINA) generally prohibits group health plans and health insurance issuers from discriminating based on genetic information. Arguably, an individual who, because of a genetic disorder, is forced to access a drug on a specialty tier and therefore incur additional costs, is placed in a position worse off from his fellow plan enrollees. However, GINA specifically adopts a provision that excludes recovery in cases where an employer or plan does not specifically target an individual based on a genetic disorder, but instead an individual simply suffers a “disparate impact.” [10]

The paper also explains, “In addition to GINA, the ACA also includes an anti-discrimination provision. Specifically, Section 1557 of the ACA extends existing federal civil rights protections to private health insurance and prohibits individuals from being subject to discrimination, excluded from participation, or denied the benefits of health programs or activities based on race, color, national origin, sex, age, or disability.” [10] Final regulations implementing Section 1557 were finalized in May 2016 and set forth standards applicable to health benefit design.  In this ruling, the term “benefit design” is given a broad meaning, including “covered benefits, benefit limitations or restrictions, and cost sharing mechanisms, such as coinsurance, copayments and deductibles.” Further, under Section 1557 adopts the term “disability” as used under the Americans with Disabilities Act and the Rehabilitation Act in which refers to “physical or mental impairment that substantially limits one or more major life activities.”  Thus, by the very terms of the implementing regulations, changes that impact a beneficiary’s cost-sharing based on that individual’s disability (which could include a disease or illness) could be viewed as discrimination. While Office of Civil Rights “decline[d] to codify examples of discriminatory benefit designs” in the final rule, they explicitly singled out “placing most or all prescription medications that are used to treat a specific condition on the highest cost formulary tiers” as being potentially discriminatory. [11] Additional clarity of this rule could ensure that differential beneficiary cost-sharing for high-value and low-value care based on health status is not impeded in the transition to value-based care.

NPC appreciates this opportunity to provide input on AKS as well as how relieving or eliminating cost-sharing obligations can improve care delivery. We would be pleased to meet with you to expand upon our comments, share our research, and continue this important discussion.

Respectfully submitted,


Robert W. Dubois, MD, PhD

Chief Science Officer



[1] US Department of Health and Human Services. (2018). Medicare and State Health Care Programs: Fraud and Abuse; Request for Information Regarding the AntiKickback Statute and Beneficiary Inducements CMP. Retrieved August 28, 2018 from:

[2] National Pharmaceutical Council. (2018). Regulatory Barriers Impair Alignment of Biopharmaceutical Price and Value. Available at:

[3] National Pharmaceutical Council and Xcenda/AmerisourceBergen. (2017). Information Wanted: Finding the Balance in Pharmaceutical Evidence Exchange With Payers and Providers. Available at:

[4] AMCP Partnership Forum: FDAMA Section 114 - Improving the Exchange of Health Care Economic Data. 2016.

[5]. U.S. Department of Health and Human Services Food and Drug Administration. (2018). Drug and Device Manufacturer Communications With Payors, Formulary Committees, and Similar Entities — Questions and Answers Guidance for Industry and Review Staff. Available at:

[6] Graff et al. (2017). Does a One-Size-Fits-All Cost-Sharing Approach Incentivize Appropriate Medication Use? A Roundtable on the Fairness and Ethics Associated with Variable Cost Sharing. J Manag Care Spec Pharm. 23(6):621-627.

[7] University of Michigan Center for Value-Based Insurance Design. (2016). A ‘Dynamic’ Approach to Consumer Cost-Sharing for Prescription Drugs. Available at:

[8] Fendrick MA, Buxbaum J, Westrich K. (2014). Supporting Consumer Access to Specialty Medications Through Value-Based Insurance Design. Available at:

[9] VBID Health. (2018). Financial Impact of HSA-HDHP Reform to Improve Access to Chronic Disease Management Medications. Available at:

[10] Barker TR, Margulies R. Variable Cost-sharing: A Review of Federal and State Laws Impacting Tiered Benefit Design. Discussion Paper.

[11] Nondiscrimination in Health Programs and Activities; Final Rule. 81 Fed. Reg. 31,434 (final rule May 18, 2016).