Drugmakers May Find New Federal Discount Rule Burdensome


A final rule released Jan. 4 that establishes penalties for drug manufacturers participating in the federal 340B discount program “will impose tremendous regulatory burdens on manufacturers and is the type of impractical regulation that should get the attention of the new administration,” attorney Donna Lee Yesner told me.

Yesner, with Morgan, Lewis & Bockius in Washington, often counsels companies on government program reimbursement, drug price reporting and compliance requirements.

Meanwhile, 340B Health, a group representing safety-net hospitals that participate in the 340B program, praised the rule saying it “should help prevent the drug industry from overcharging America’s 340B health providers for live saving medicines” and “it’s a welcome development in light of public outrage about the unsustainable cost of prescription drugs.”

Under the final rule from the Department of Health and Human Services, manufacturers must pay a penalty if they intentionally charge above what is known as the ceiling price. The rule also explains how manufacturers should determine the ceiling price for a drug. The rule was published Jan. 5 in the Federal Register (82 Fed. Reg. 1210) and takes effect March 6.

Under the 340B program, drug manufacturers participating in Medicaid agree to provide outpatient drugs to covered entities, such as safety-net hospitals, at significantly reduced prices.

Yesner said the rule “rigidly applies the statutory language where convenient to require manufacturers to retroactively refund the difference between a standardized provisional price for new drugs and the calculated price, a costly process, while denying manufacturers the right to estimate a higher price more in line with the expected calculated price that could avoid refunds.”

At the same time, the rule “ignores the statutory lag time between reported AMP [average manufacturer price] and the 340B price thereby requiring manufacturers to refund an additional full quarter.”

My full article on the rule is at https://www.bna.com/penalties-drugmakers-federal-n73014449388/.

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