Back to the Drawing Board for HHS Guidance on Rx Discounts

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By Bronwyn Mixter

The Trump administration sent back to the HHS a guidance on drug discounts that was under White House review at the end of the Obama administration.

The proposed guidance defined who is considered a patient for purposes of the 340B drug program. The Health and Human Services guidance also covers drug company responsibilities, such as procedures for issuing credits and refunds.

The White House Office of Management and Budget Jan. 30 marked the final guidance document (RIN:0906-AB08) as withdrawn, sending it back to the HHS.

The 340B program helps safety-net providers such as hospitals obtain discounted drugs. The HHS released a proposed version of what it calls the omnibus guidance document in August 2015. To advance, the guidance would now need to be resubmitted to the OMB.

The drug industry generally supports the guidance because it says more clarity is needed for the 340B program, particularly for the definition of patient. However, safety-net hospitals have concerns with the guidance because they say it could limit their ability to serve the poor by putting additional restrictions on drug discounts.

The Health Resources and Services Administration (HRSA), the part of the HHS that administers the program, said in August 2015 that it was “proposing this omnibus guidance to provide increased clarity in the marketplace for all 340B Program stakeholders and strengthen HHS’s ability to administer the 340B Program effectively.” The agency chose a guidance rather than a rule for this action.

Attorney: Guidance Needs Revision

Attorney Donna Lee Yesner told Bloomberg BNA in a Jan. 31 e-mail she’s not surprised that “pending regulatory guidance of this magnitude” would be re-examine by a new administration. Yesner, with Morgan, Lewis & Bockius in Washington, often counsels companies on government program reimbursement, drug price reporting and compliance requirements.

“Industry and covered entities [such as hospitals] need more clarity, but my hope is that the new Administration will consider how expansive and burdensome industry subsidization of the 340B program has become, and return the program to its original purpose of reducing the cost of drugs provided by federally-funded clinics to indigent and uninsured patients,” Yesner said.

She added, “I would like to see provisions, such as the definition of patient, that are consistent with this purpose retained, and provisions like the contract pharmacy program, which is not authorized by statute, eliminated.”

Fate of Recent 340B Rule

Yesner also said she hopes the recent final rule (RIN:0906-AA89) on civil monetary penalties under the 340B program, which was released by the HHS Jan. 4, “will be re-reviewed in light of its impractical and burdensome administrative costs and the prematurity of establishing civil monetary penalties for program non-compliance before the agency’s guidance is finalized.”

The penalty rule was required under the Affordable Care Act, which could be repealed or revised in the new Congress. Under the rule, manufacturers must pay a penalty if they intentionally charge above what is known as the ceiling price. The law says the penalty can’t exceed $5,000 for each instance of overcharging a covered entity.

Safety-Net Hospitals Weigh In

Randy Barrett, vice president of communications at 340B Health, told Bloomberg BNA in a Jan. 31 e-mail the OMB’s action “was expected given the president’s request for review of all pending regulations.” 340B Health represents safety-net hospitals receiving discounts in the program.

“Our members will continue to follow the rules and use their 340B savings to improve services and care for the underserved,” Barrett said.

Another group, America’s Essential Hospitals, said it was glad the Trump administration pulled the document. Bruce Siegel, the president and CEO of the group, said, “This welcome development follows strong advocacy by essential hospitals, which vigorously opposed this so-called `mega-guidance' for its dramatic narrowing of eligibility for affordable drugs. Today’s decision preserves the 340B program’s valuable benefits to low-income and other disadvantaged people, and the hospitals on which they depend.”

Rx Industry Seeks Program Changes

Stephanie Silverman, a spokeswoman for the Alliance for Integrity and Reform of 340B (AIR 340B), told Bloomberg BNA in an e-mail “the members of AIR 340B see strong interest in both legislative and regulatory action this year to address the serious challenges to the 340B program.”

AIR 340B is a coalition of patient advocacy groups, clinical care providers and manufacturers. Members include the Pharmaceutical Research and Manufacturers of America (PhRMA) and the Biotechnology Innovation Organization (BIO).

“We look forward to working with the new Administration and the 115th Congress to ensure the program gets back on track, so it can actually benefit the uninsured, vulnerable patients for whom it was intended but who are not currently seeing its value,” Silverman said.

To contact the reporter on this story: Bronwyn Mixter in Washington at

To contact the editor responsible for this story: Brian Broderick at

For More Information

The proposed version of the guidance is at

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