Notice of Proposed Rulemaking Issued on 340B Program

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The Trump Administration recently released a Notice of Proposed Rulemaking regarding regulatory changes to the 340B program since its inception.

Many readers will remember that the Health Resources and Services Administration (HRSA) is responsible for administering section 340B of the Public Health Service Act (PHSA), also known as the 340B Drug Pricing Program. On January 5, 2017, HRSA published a final rule that set forth how the 340B ceiling price is to be calculated and how civil monetary penalties are to be applied.

Since that time, several delays have ensued, with the most recent delay coming on June 5, 2018, when HRSA published a final rule that delayed the effective date of the 340B ceiling price and civil monetary rule until July 1, 2019, to allow a more deliberate process of considering alternative and supplemental regulatory provisions and to allow for sufficient time for additional rulemaking. After further consideration of the issue, the Department of Health and Human Services (HHS) proposes to cease any further delay of the rule and change the effective date from July 1, 2019, to January 1, 2019.

Now, after nearly two years of continuous delays, HRSA now aims to implement The Civil Monetary Penalties Final Rule as of January 1, 2019. The impending Final Rule will codify HRSA’s penny pricing policy; dictate procedures for setting 340B prices for new drugs; delegate to OIG authority to determine whether to pursue civil monetary penalties against manufacturers; set out expectations regarding “intentional overcharging;” and address many other important 340B matters.

The reason for the most recent final rule, moving up the effective and implementation date to January 1, 2019, is that it was previously delayed so that HHS could develop new policies to address the rising costs of prescription drugs. Now, the Department has determined that finalizing the 340B ceiling price and civil monetary penalty rule will not interfere with HHS’ development of the more comprehensive policies, thereby negating the need for a delay.

For those who may need a refresher, the Final Rule is set to: implement a new civil monetary penalty regime for any manufacturer who knowingly and intentionally charges a covered entity more than the ceiling price for a 340B drug; require that manufacturers calculate the 340B ceiling price on a quarterly basis and detail how the manufacturers must calculate the 340B ceiling price; and require that manufacturers charge $0.01 (penny pricing policy) for drugs when the ceiling price calculated equals zero.

Unfortunately, however, the pricing information system will not be available for review until after the Final Rule is fully implemented.

The NPRM invites the public to comment on whether moving the Final Rule’s effective date to January 1, 2019, will create any potential disruptions in implementation of the Final Rule. Comments must be received by no later than November 23, 2018. If you are interested in submitting comments, you may submit them through the Federal eRulemaking Portal.

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