- HHS plans to move forward the implementation date of a long-delayed 340B price transparency rule that will stop drug manufacturers from overcharging hospitals for drugs purchased under the drug discount program.
In a recent notice of proposed rulemaking from the Health Resources and Services Administration (HRSA) in HHS, the federal department stated that it would move up the effective date of a final rule that would implement drug price ceilings for the 340B program and grant HHS the authority to fine drug manufacturers that knowingly overcharge hospitals.
The effective date would move from July 1, 2019, to January 1, 2019, which marks the first day of the quarter for the 340B Drug Pricing Program.
The final rule will implement civil monetary penalties for drug manufacturers that knowingly and intentionally charge a 340B hospital or entity more than the ceiling price for a covered drug. The rule will also require manufacturers to determine 340B ceiling prices quarterly and charge hospitals a penny for drugs when the ceiling price equals zero.
HRSA finalized the rule in January 2017 and set an implementation date of April 1, 2017.
However, the HHS agency has delayed the implementation of the 340B price transparency rule five times since its finalization.
The Trump Administration’s regulatory freeze first prompted the HRSA to delay the implementation date to March 21, 2017. And HRSA continued to postpone the effective date of the final rule.
The most recent delay occurred in June 2018. During that time, HRSA pushed the implementation date back for the fifth time to July 1, 2019, because the agency feared the rule would interfere with HHS’ efforts to develop new drug pricing rules.
Now, HRSA is saying that the implementation of the 340B price transparency rule will not interfere with HHS’ attempts to establish comprehensive drug pricing policies. Accordingly, the agency “no longer believes a delay in the effective date is necessary,” the notice of proposed rulemaking stated.
The implementation postponements are the subject of an ongoing lawsuit against HHS.
The American Hospital Association (AHA), Association of American Medical Colleges (AAMC), America’s Essential Hospitals, 340B Health, and three hospital systems sued HHS in September 2018. The groups asked a federal court to order HHS to make the final rule effective within 30 days.
The 340B stakeholders argued that the delays have caused significant harm to over 2,400 covered 340B entities. Most notably, the delay in implementation has resulted in drug manufacturers overcharging the entities for discounted 340B drugs in the 22 months that have passed since HRSA finalized the rule.
The stakeholders also contended that the delays were “arbitrary and capricious” and constituted “unreasonably delayed agency action” under the Administrative Procedure Act.
HHS has attempted to stop the lawsuit, especially in light of its recent notice of proposed rulemaking. The federal department stated that moving the effective date to January 1, 2019 “would effectively provide plaintiffs with all the relief they have sought in their Complaint . . . and thereby moot the case.”
But a federal judge recently denied a motion from HHS for a stay in the lawsuit. US District Judge John D. Bates stated that “there is no guarantee that HHS will issue a final rule advancing the effective date of the Rule, or that it will become effective on January 1, 2019, given the length of the comment period and the requirement that the final rule be published 30 days before it becomes effective.”
Therefore, HHS must still respond to the plaintiffs’ motion for summary judgment by Nov. 13, 2018.
The AHA stated on its website that the Judge Bates’ decision “puts more pressure on HHS to stick to the Jan. 1 deadline for making the final rule effective.”
Stakeholders can comment on the notice of proposed rulemaking for the 340B price transparency rule by November 23, 2018.