- After several delays, HHS will implement drug price ceilings and civil monetary penalties for manufacturers under the 340B Drug Pricing Program in 2019, according to a final rule from the HHS agency, Health Resources and Services Administration (HRSA).
The final rule will implement civil monetary penalties for drug manufacturers who “knowingly and intentionally” charge a covered 340B entity more than the ceiling price for a covered outpatient drug, as well as provide clarity on the requirement that manufacturers determine the 340B ceiling prices quarterly and how they are to calculate the price.
The final rule will also establish the rule that manufacturers charge a $0.01 for drugs when the ceiling price is zero. The policy is known as penny pricing.
HRSA will enforce the rule starting January 1, 2019. But that was not always the case.
The HHS agency first proposed the rule in June 2015 and finalized the requirements in January 2017. The effective was slated to be March 6, 2017.
However, HHS delayed the effective date of the rule to July 1, 2019, to address concerns with prescription drug rates and the 340B Drug Pricing Program. HHS reported that it delayed the rule’s implementing to develop “new comprehensive policies to address the rising costs of prescription drugs.”
The policies would also “address drug pricing in government programs, such as Medicare Parts B & D, Medicaid, and the 340B Program.”
In total, the federal department pushed the implementation of 340B drug price ceilings and civil monetary penalties five times.
The delays were at the center of a lawsuit against HHS. The American Hospital Association (AHA) sued HHS over the implementation of the delayed rule, arguing the lack of civil monetary penalties and drug ceiling requirements harmed hospitals.
HRSA proposed in early November 2018 to push forward the implementation date from July 2019 to January 1, 2019, because the rule would no longer impact HHS’ development of new prescription drug policies.
“[A]s explained in the proposed rule, HHS has determined that the finalization of the 340B ceiling price and civil monetary penalty rule will not interfere with HHS’s development of these comprehensive policies,” the new final rule stated. “Accordingly, HHS no longer believes a delay in the effective date is necessary and is changing the effective date of the rule from July 1, 2019, to January 1, 2019. The implementation date and the effective date will be the same.”
The AHA applauded HRSA for finalizing the earlier start date for the final rule. The association’s Executive Vice President Tom Nickels wrote:
“The AHA is pleased that in response to our lawsuit, today’s final rule ensures that the implementation of the long-delayed 340B Drug Pricing Program ceiling price and civil monetary penalties policies will be effective January 1, 2019. Earlier this year, the AHA along with other national organizations representing 340B hospitals, filed a lawsuit to force implementation of this rule in order to shine needed light on drug pricing and to hold price-gouging drug companies accountable. We continue to strongly urge HHS to make available online drug pricing information for 340B hospitals as this rule requires as soon as possible after January 1, and no later than April 1, so that instances of drug company overcharging can be uncovered and penalties enforced.”
An industry group representing hospitals in the 340B Drug Pricing Program also commended HRSA for finalizing the January 1, 2019 implementation date. The group, 340B Health, was also part of the AHA lawsuit against HHS.
“The administration made the correct decision today in finalizing a Jan. 1, 2019, effective date for long-overdue transparency and accountability regulations for pharmaceutical manufacturers participating in the 340B drug pricing program,” stated Maureen Testoni, Interim President and CEO of 340B Health. “The final rule issued today by the Dept. of Health and Human Services and the Health Resources and Services Administration is a big step toward stopping drug companies from overcharging 340B hospitals, clinics, and health centers.”
While the final rule resolves some issues the AHA and 340B Health have with HHS policies for the 340B Drug Pricing Program, the groups are continuing to sue the federal department over program payment cuts.
CMS will reduce Medicare payments to 340B hospitals by $1.6 billion. AHA and several other industry groups sued HHS to stop the cuts, which would significantly harm the ability of 340B hospitals to deliver high-quality, low-cost care, the lawsuit alleged.