June 5, 2018

HHS delays final rule on 340B overcharge for the 5th time

Daily Briefing

    HHS on Friday finalized a rule that once again delays the effective date of a yet-to-be-released final rule that would penalize drugmakers that deliberately overcharge providers for drugs purchased under Medicare's 340B drug discount program, Virgil Dickson reports for Modern Healthcare.

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    The federal 340B program requires drug manufacturers to provide outpatient drugs to eligible health care providers at discounts ranging from 20% to 50%. The program, created by Congress in 1992 and expanded under the Affordable Care Act, focuses its discounts on hospitals with disproportionately low-income patient populations. However, the program has come under scrutiny, with some questioning the amount of charity care participating hospitals are providing.

    The yet-to-be-released rule, which is pending review by the White House Office of Management and Budget (OMB), originally was scheduled to take effect Feb. 28, 2017, and the federal government was scheduled to begin enforcing it on April 1, 2017. However, HHS repeatedly has delayed the effective date after stakeholders said some of the rule's restrictions were too narrow.

    Little is known about the rule, since it has not been made public. But CQ News in September 2017 reported the final rule would levy fines up to $5,000 against drugmakers that "knowingly and intentionally" overcharge providers for drugs purchased through the 340B program and would require drugmakers to offer refunds for overcharges on new drugs rather than requiring providers to request refunds, as is currently required. According to Modern Healthcare, the final rule would also set drug price ceilings under Medicare's 340B drug discount program.

    HHS issues a fifth delay of the rule's effective date

    HHS on Friday delayed for the fifth time the rule's effective date from July  2018 to July 2019.

    HHS said the delay is intended "to allow a more deliberate process of considering alternative and supplemental regulatory provisions and to allow for sufficient time for any additional rulemaking."

    HHS added, "HHS believes that it would be disruptive to require stakeholders to make potentially costly changes to pricing systems and business procedures to comply with a rule that is under further consideration and for which substantive questions have been raised," including whether courts would uphold a provision penalizing drugmakers that deliberately overcharge providers for 340B drugs.


    American Hospital Association EVP Tom Nickels in a statement expressed disappointment over the delay, saying, "The 340B ceiling price and civil monetary penalties rule were intended to shine needed light on drug manufacturer price increases and hold drug manufacturers accountable for price overcharging."

    340B Health, an association comprising more than 1,300 hospitals, said the "decision by the Trump administration to delay enforcement of a rule penalizing pharmaceutical companies that overcharge providers in the 340B drug pricing program will allow drugmakers to continue to saddle hospitals, clinics and health systems with higher and higher prices" (Dickson, Modern Healthcare, 5/1).

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