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November 1, 2018

It's coming: 340B rule delayed 5 times to take effect in January, HHS says

Daily Briefing

    HHS on Wednesday said a long-delayed rule for the 340B drug discount program will take effect Jan. 1, 2019.

    The 340B drug pricing controversy, explained

    Rule delayed 5 times

    Medicare's 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.

    HHS in June delayed for the fifth time the effective date of a yet-to-be-released final rule that would penalize drugmakers that deliberately overcharge providers for drugs purchased under the 340B program. The yet-to-be-released final rule originally was scheduled to take effect Feb. 28, 2017, and the federal government was scheduled to begin enforcing it on April 1, 2017. HHS' action in June delayed the rule's effectiveness date until July 2019.

    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 also would set drug price ceilings under the 340B program.

    The American Hospital Association along with several other groups in September filed a lawsuit to compel HHS to release the final rule.

    Rule coming in January

    The Health Resources and Services Administration (HRSA) in a notice issued Wednesday said it intends to implement the rule on Jan. 1, 2019, six months ahead of the previous July 1, 2019 effectiveness date. "After further consideration of the issue, HHS proposes to cease any further delay of the rule," the agency said.

    HRSA said it had delayed the rule previously because it needed more time to implement the rule properly and it wanted to explore possible alternatives or supplemental regulations. According to HRSA, HHS officials were concerned implementing the rule could affect the Trump administration's efforts to lower drug prices.

    However, HRSA in the notice said it has "determined that the finalization of the 340B ceiling price and civil monetary penalty rule will not interfere with the department's development of these comprehensive policies." As such, the agency said it decided to move up the effectiveness date to Jan. 1.

    HRSA will accept comments on the date change proposal until Nov. 24 (Dickson, Modern Healthcare, 10/31; Minemeyer, FierceHealthcare, 10/31).

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