OMB withdraws draft 'mega-guidance' for 340B drug program

Some safety net hospitals applaud the move

The Office of Management and Budget (OMB) on Monday withdrew draft “mega-guidance” for the 340B Drug Pricing Program that would have restricted eligibility for discounts under the program.

Feds release proposed changes to 340B program 

Now that it has been withdrawn, the draft guidance would have to be resubmitted to OMB in order to advance, according to Bloomberg BNA.

The federal 340B program requires drug manufacturers to provide outpatient drugs to eligible health care providers at discounts ranging from 20 percent to 50 percent. The program, which was 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 (HRSA).

Draft guidance details

The draft guidance would have increased from three to six the number of conditions for patients to be eligible for discounted medicines.

In addition, the guidance would have clarified that only drugs billed to insurers as outpatient prescriptions would be eligible for program discounts.

Observers, stakeholders react

Donna Yesner—an attorney at Morgan, Lewis & Bockius—said she was not surprised the draft guidance was withdrawn, adding that the Trump administration likely would review "pending regulatory guidance of this magnitude." Yesner added, "Industry and covered entities [such as hospitals] need more clarity, but my hope is that the [Trump] administration will consider how expansive and burdensome industry subsidization of the 340B program has become, and return the program to its original purpose of reducing the cost of drugs provided by federally funded clinics to indigent and uninsured patients."

According to Politico Pro, drugmakers, which have argued that discounts under the program are becoming too widespread, likely will disagree with OMB's move to withdraw the guidance.

Stephanie Silverman—a spokesperson for the Alliance for Integrity and Reform of 340B, a coalition that includes pharmaceutical companies—said the group "look[s] forward to working with the [Trump] administration and the 115th Congress to ensure the program gets back on track, so it can actually benefit the uninsured, vulnerable patients for whom it was intended but who are not currently seeing its value."

Hospitals, meanwhile, praised OMB's decision.

How to reduce avoidable cost and utilization

Bruce Siegel, president and CEO of America's Essential Hospitals, in a statement said withdrawing the guidance "preserves the 340B program's valuable benefits to low-income and other disadvantaged people, and the hospitals on which they depend."

Randy Barrett—VP of communications at 340B Health, which represents safety-net hospitals that receive discounts under the program—said he also "expected" OMB to pull the draft guidance "given [Trump's] request for review of all pending regulations." He added, "Our members will continue to follow the rules and use their 340B savings to improve services and care for the underserved" (Karlin-Smith, Politico Pro, 1/31 [subscription required]; Mixter, Bloomberg BNA, 2/1; Draft guidance, 8/28/15).

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