By Leslie Small

While a new federal proposal to overhaul the prescription drug rebate system may not be a significant threat to major managed care companies’ bottom lines, it will likely be disruptive for insurers and PBMs alike.

The proposed rule would remove safe-harbor protections under the federal anti-kickback statute for rebates paid by drug manufacturers to PBMs, Part D plans and Medicaid managed care organizations. Instead, it would create two new safe harbors: one for prescription drug discounts offered directly to patients, and one for fixed-fee service arrangements between drug manufacturers and PBMs.

If the proposed rule goes into effect, health insurers will likely have to raise Part D premiums, as they currently use the rebates they get from manufacturers to push premiums down, says Chris Sloan, a director at Avalere. That can be problematic for Part D plans, since one of the main factors they compete on are low premiums.

PBMs, meanwhile, are facing even more disruption, Sloan says. “Figuring out how to transition the revenue that they are receiving in the space now, from a percentage-of-a-rebate-type contract to a fixed-fee agreement with the health plans that [is] not tied to the cost of the drugs, is going to be a pretty monumental change.”

Still, multiple analysts pointed out that a very small piece of those companies’ earnings is likely to be affected by the new rebate rule if it goes into effect.

Based in part on company disclosures, “we estimate the big PBMs’…exposure to all-in rebate retention at [less than] 4% of earnings,” Citi analyst Ralph Giacobbe wrote.