Penalty Rule for Drugmaker Overcharges Pushed Back Third Time


Drugmakers are getting another delay in a final rule imposing penalties on them for overcharging safety-net hospitals and other providers.

The Department of Health and Human Services is delaying the rule’s effective date until Oct. 1, the agency said in a notice published May 19 in the Federal Register. This follows an earlier postponement until May 22, and an even earlier postponement until March 21.

The rule (RIN:0906-AA89) on ceiling prices and civil monetary penalties for the 340B program originally was published near the end of the Obama administration after a heated public debate over drug costs. Under the 340B program, drug manufacturers provide outpatient drugs to covered entities, such as safety-net hospitals, at significantly reduced prices. The rule requires drug manufacturers to pay a penalty if they intentionally charge above what is known as the ceiling price.

Attorney Donna Lee Yesner told me she’s “relieved that the new rule’s effective date has been extended to October” and that HHS’s Human Resources and Services Administration has acknowledged in extending the date that it imposes significant compliance burdens. Yesner, with Morgan, Lewis & Bockius in Washington, counsels companies on government program reimbursement, drug price reporting and compliance requirements.

Yesner said it’s “unclear whether HRSA intends to re-evaluate the rule’s provisions per the president’s order and possibly amend it. It’s also unclear whether the absence of a new director of HRSA is affecting the rulemaking process.” In February, President Donald Trump signed an executive order that calls for a reduction in “unnecessary regulatory burdens placed on the American people.” Yesner is a Bloomberg BNA advisory board member.

Meanwhile, 340B Health, an association of hospitals and health systems that participate in the 340B program, said in a May 18 statement that it is disappointed the rule was delayed. However, the group said it takes comfort that, in announcing the delay, the HHS declined to withdraw the rule and issue a new proposal, as urged by the drug industry. The group also said it is pleased that the HHS didn’t suggest that another delay might be necessary.

Read my full article here.

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