Safety-Net Providers Want HHS to Implement Drugmaker Penalty Rule


Safety-net providers such as hospitals want the HHS to begin implementing a January final rule that imposes penalties on drugmakers for overcharging for their products in a federal discount program.

Meanwhile, drugmakers said the rule, issued under the 340B drug pricing program, should be delayed until the Department of Health and Human Services addresses their concerns that the rule is overly burdensome. Under the 340B program, drug manufacturers provide outpatient drugs to covered entities, such as safety-net hospitals, at significantly reduced prices.

In a March 20 notice, the HHS delayed the rule’s effective date until May 22 and sought comments on whether to delay it even longer, until Oct. 1. Comments on the Oct. 1 extension were due April 19. Under the rule (RIN:0906-AA89), drug 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.

A coalition of hospitals and other safety-net providers said in comments that it “strongly opposes both delays [of the final rule] because they will harm 340B covered entities and the patients that they serve.” Members of the coalition include 340B Health, America’s Essential Hospitals and the National Association of Community Health Centers, among others.

“Substantial drug price increases negatively impact providers’ financial health and, in turn, their ability to care for patients,” the coalition said. “Therefore, it is critically important that HRSA [Health Resources and Services Administration] have the tools it needs to ensure that covered entities are not subjected to overcharges by manufacturers.” HRSA is the part of the HHS that administers the 340B program.

Donna Lee Yesner, a partner in Morgan Lewis’s FDA Practice and a Bloomberg BNA advisory board member, told me the final rule “is precisely the type of impractical and burdensome regulation that should be re-reviewed.”

Yesner is on the advisory board of the Coalition for Government Procurement, which filed comments on behalf of its pharmaceutical manufacturer members urging a delay in the implementation of the rule until October. The Coalition is a nonprofit association advocating for “common sense in government procurement.” Its pharmaceutical manufacturer members include Johnson & Johnson, GlaxoSmithKline, Pfizer, Genentech and Teva Pharmaceuticals.

Read my full article here.

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