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May 19, 2017

HHS further delays final rule on 340B drug discount program

Daily Briefing

    HHS on Thursday issued a final rule that delays until Oct. 1 a policy that would penalize drugmakers that deliberately overcharge providers for drugs purchased under the 340B drug discount program.

    What providers can learn from the drug pricing debate

    The federal 340B program requires drug manufacturers to provide outpatient drugs to eligible health care providers at discounts ranging from 20 to 50 percent. The program, created by Congress in 1992 and expanded under the Affordable Care Act, focuses on hospitals with disproportionately low-income patient populations. About 40 percent of U.S. hospitals are eligible to participate in the program, which saved providers about $3.8 billion in medication costs in 2013, according to the Health Resources and Services Administration.

    However, the program has come under scrutiny, with some questioning the amount of charity care participating hospitals are providing.

    HHS further delays policy change

    HHS' final rule delays until Oct. 1 the effective date and enforcement of a final rule issued under former President Barack Obama's administration that, among other things, would subject drugmakers that "knowingly and intentionally" overcharge providers for drugs purchased through the 340B program to a fine of up to $5,000 per offense. Further, the policy requires drugmakers to offer refunds for overcharges on new drugs once the overcharges are discovered, rather than requiring providers to request refunds, as currently is required.

    The rule originally was scheduled to take effect Feb. 28 and the federal government was scheduled to begin enforcing the rule on April 1. However, HHS had delayed the effective date after stakeholders said some of the rule's restrictions were too narrow. In March, HHS in an interim rule again delayed the rule until May 22 and accepted public comments through on possibly further delaying the rule.

    HHS in the new rule said it decided to further postpone the effective date after reviewing stakeholder comments, which included requests from the drug industry to withdraw the regulation altogether and issue a new one. The department said the additional time "before the [policy] takes effect constitutes an extra quarter and will assist stakeholders in preparing to comply with these new program requirements."


    Some industry stakeholders expressed disappointment over the additional delay but were pleased that HHS declined to withdraw the rule altogether.

    Ted Slafsky, president and CEO of 340B Health, in a statement said the group is "concerned that further delay of the rule will harm safety-net providers and their patients, especially in this time of skyrocketing drug costs," but added that it is satisfied with HHS' decision to not change the rule (Bean, Becker's Hospital CFO, 5/18; AHA News, 5/18; 340B Health release, 5/18; HHS final rule, accessed 5/19).

    What providers can learn from the drug pricing debate

    We already knew that patients are becoming more sensitive to health care costs. But public uproar over one drug's 5,000 percent "overnight" price hike proves that patients are more discerning—and vocal—than ever. With more of their money on the line, patients are actively deciding when and where to access care based on cost.

    We saw it coming—and we laid out concrete tactics for dealing with price sensitivity in your market. The first chapter in our study, The Consumer-Oriented Ambulatory Network, focuses on how you can retain market share by making services more affordable. Download the study to learn more.

    Get the Study

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