Another Potential Delay for Drugmaker Penalty Rule


Drugmakers are set to get more relief from a final rule imposing penalties on them for overcharging safety-net hospitals and other providers.

The Department of Health and Human Services is proposing to delay the rule’s effective date until July 1, 2018, the agency said in a notice to be published Aug. 21 in the Federal Register. The effective date has already been delayed several times, and most recently the rule was set to take effect Oct. 1. The HHS is seeking comments on the additional delay for the rule, which was issued under the 340B drug pricing program. Comments are due Sept. 20.

The rule (RIN:0906-AA89) on ceiling prices and civil monetary penalties for the 340B program was published near the end of the Obama administration after a heated public debate over drug costs. Under the 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, and says the penalty can’t exceed $5,000 for each instance of overcharging a covered entity.

Unsurprisingly, the pharmaceutical industry is happy with the delay. Nicole Longo, a spokeswoman for the Pharmaceutical Research and Manufacturers of America, told me “PhRMA is glad to see that the Health Resources and Services Administration (HRSA) is seeking comment on whether to further delay the final rule’s effective date.” HRSA is the part of the HHS that administers the program.

“We support this delay and are pleased to see HRSA intends to engage in further rulemaking,” Longo said. “We continue to have a number of concerns with the rule as it imposes significant burdens on biopharmaceutical manufacturers.”

Hospital groups, however, oppose the delay.

340B Health, a group that represents nonprofit hospitals and health systems participating in the 340B program, said in a statement it “strongly disagrees with the Trump administration’s proposal to again delay—this time to July 1, 2018—a long overdue 340B drug discount program regulation to punish drug manufacturers that illegally overcharge safety-net hospitals and other healthcare providers for lifesaving medicines.”

Ted Slafsky, president and chief executive officer of 340B Health, said “there is no reasonable excuse for delaying this regulation any longer. Nor is there any good reason for reopening the matter for further rulemaking, as the administration proposes.”

Ashley Thompson, senior vice president for public policy analysis and development at the American Hospital Association, also said her group is “once again disappointed in the continued delay” of the rule and urged HRSA to implement the rule.

Read my full article here.

Stay on top of new developments in health law and regulation with a free trial to the Health Law Resource Center.

Learn more about Bloomberg Law and sign up for a free trial.