October 18, 2019

October 18, 2019

Subscribe to Latest Legal News and Analysis

October 17, 2019

Subscribe to Latest Legal News and Analysis

October 16, 2019

Subscribe to Latest Legal News and Analysis

HRSA Establishes January 1, 2019 Effective Date for 340B Ceiling Price and Civil Monetary Penalty Rule

On November 30, 2018, the Department for Health and Human Services (“HHS”) Health Resources and Services Administration (“HRSA”) will publish its final rule to change the effective date for its 340B Drug Pricing Program ceiling price and manufacturer civil monetary penalty final rule to January 1, 2019.

After two years of proposed rulemaking, HHS published a final rule on January 5, 2017 outlining requirements of manufacturers to calculate the 340B ceiling price for a covered outpatient drug and the process by which HRSA can levy civil monetary penalties on drug manufacturers for knowingly and intentionally charging beyond the statutory ceiling price. This final rule was initially announced to be effective March 6, 2017 but was delayed on several instances. HHS’s most recent delay was announced on June 5, 2018, when HHS published a second final rule delaying the regulation’s effective date until July 1, 2019 so it could develop “comprehensive policies to address the rising costs of prescription drugs.” HHS then issued a proposed rule on November 2, 2018 soliciting comments on potentially changing the effective date from July 1, 2019 to January 1, 2019 to eliminate further delay. HHS’s latest announcement solidifies the effective date as January 1, 2019.

HHS maintains that finalizing the 340B ceiling price and civil monetary penalty rule will not interfere with its plan to develop separate drug pricing policies. Commenters expressed concern that HHS has not established adequate guidance to implement the rule appropriately, responded to public questions, or provided adequate rationale for its change of view on the need for additional rulemaking. HHS addressed these concerns by explaining that issuing additional guidance is unnecessary to implement the rule and that it would be more efficient for the rule to go into effect sooner and to “assess the need for further rulemaking and guidance after the rule is in effect.” Other commenters feared that they would be unable to achieve compliance in time for a January 1, 2019 effective date. HHS responded that, since HHS published the initial final rule in January 2017, these stakeholders have had “sufficient time” to adjust their systems and update their policies and procedures.

After January 1, 2019, drug manufacturers must calculate the 340B ceiling price for covered drugs on a quarterly basis consistent with the January 5, 2017 final rule. Most significantly, drug manufacturers will newly be subject to financial sanctions for knowingly and intentionally overcharging a covered entity, although HRSA anticipates using such penalties in “rare situations.”  

©2019 Epstein Becker & Green, P.C. All rights reserved.

TRENDING LEGAL ANALYSIS


About this Author

Alan J. Arville, Epstein Becker Green, Health Care Lawyer, Life Science Attorney
Member

ALAN J. ARVILLE is a Member of the Firm in the Health Care and Life Sciences practice, in the Washington, DC, office.

Mr. Arville provides strategic, transactional, and regulatory guidance to the health care industry. Mr. Arville’s legal practice primarily focuses on matters relating to the distribution, dispensing, and reimbursement of pharmaceuticals, including the Medicare Part D program, the Medicare Advantage program, the 340B Drug Discount Program, federal anti-kickback and anti-inducement laws, HIPAA privacy and security...

202-861-1805
Constance A. Wilkinson, Epstein Becker, Life Sciences Litigation Lawyer, Health Audits Attorney, Due Diligence
Member

CONSTANCE A. WILKINSON is a Member of the Firm in the Litigation and Health Care and Life Sciences Practices in the firm's Washington, DC office, with a primary focus on federal health care contracting.

Ms. Wilkinson:

  • Conducts due diligence and internal investigations and audits and responding to criminal fraud and abuse investigations

  • Analyzes cost allowability and pricing issues for proposals or audits

  • Develops corporate compliance policies and programs

  • Advises pharmaceutical manufacturers regarding pricing under the Federal Supply Schedule, the Medicaid Drug Rebate Program, the Veterans Health Care Act and Section 340B of the Public Health Service Act

  • Litigates bid protests

  • Structures technical data rights agreements.

Ms. Wilkinson has significant experience with audits of fee-for-service and managed care contractors participating in the Federal Employee Health Benefits Program (FEHBP), pharmaceutical pricing and procurement and health care quality improvement activities and external review, including conflict of interest issues. 

202-861-1378
James Tam, Epstein Becker Law Firm, Healthcare Law Attorney
Associate

James Tam is an Associate in the Health Care and Life Sciences practice, in the Washington, DC, office of Epstein Becker Green.

Mr. Tam:

  • Advises clients on public and private policies on issues arising under Medicare and Medicaid, including coding, coverage, and payment

  • Advises pharmaceutical manufacturers regarding federal pricing issues under 340B, the Federal Supply Schedule, Medicare, and Medicaid

  • Provides health regulatory advice on...

202-861-1883
Lauren Farruggia, Epstein Becker Law Firm, Washington DC, Health Care and Litigation Attorney
Law Clerk

Lauren A. Farruggia is a Law Clerk   in the Health Care and Life Sciences practice, in the Washington, DC, office of Epstein Becker Green. She will be focusing her practice on FDA marketing approval of medical devices and pharmaceuticals, government and commercial reimbursement matters, fraud and abuse issues, and government investigations.

Ms. Farruggia received her J.D., with honors, from The George...

202-861-1854