September 29, 2017

HHS delays overcharge rule for 340B drug discount program

Daily Briefing

The Trump administration on Thursday delayed the effective date of a final rule that would penalize drugmakers that deliberately overcharge providers for drugs purchased under the 340B drug discount program.

A proposed $900M cut to 340B payments—and other early impressions from the 2018 OPPS rule

The federal 340B program requires drug manufacturers to provide outpatient drugs to eligible health care providers at discounts ranging from 20 to 50 percent. The program, created by Congress in 1992 and expanded under the Affordable Care Act, focuses 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 delays final rule's effective date

HHS said it would delay until July 1, 2018, the effective date of a final rule that would levy fines up to $5,000 against drugmakers that "knowingly and intentionally" overcharge providers for drugs purchased through the 340B program. Under the final rule, drugmakers also would be required to offer refunds for overcharges on new drugs rather than requiring providers to request refunds, as is currently required.

In addition, the rule detailed how drugmakers must determine the ceiling price for covered outpatient drugs each quarter. Under the rule, the ceiling price must be calculated as the average manufacturer price from the previous calendar quarter for the smallest unit of measure, minus the unit rebate amount. If the ceiling price is less than $0.01, the ceiling price would be adjusted to $0.01—the so-called "penny provision." According to HHS, the 340B price occasionally calculates to zero.

The rule originally was scheduled to take effect Feb. 28 and the federal government was scheduled to begin enforcing it on April 1. However, HHS has repeatedly delayed the effective date after stakeholders said some of the rule's restrictions were too narrow.

HHS in a notice Thursday further delaying the rule said, "Requiring manufacturers to make targeted and potentially costly changes to pricing systems and business procedures in order to comply with a rule that is under further consideration and for which substantive questions have been raised would be disruptive" (AHA News, 9/28; Siddons, "TrumpTracker," CQ HealthBeat, 9/28 [subscription required]).

Next: Streamline PA processes for provider-administered drugs

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