October 26, 2020

Volume X, Number 300

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October 23, 2020

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HRSA Issues Proposed Rule Requiring Community Health Center Grant Recipients to Provide Certain Drugs to Low-Income Patents at 340B Prices

On September 24, 2020, the Health Resources and Services Administration (HRSA) released a proposed rule that, if finalized, would require 340B-participating recipients of federal grants under Section 330(e) of the Public Health Service Act (known as community health centers (CHCs)) to provide insulin and injectable epinephrine to low-income patients at 340B acquisition prices. HRSA will accept public comments on the proposed rule until October 28, 2020.

IN DEPTH


The proposed rule follows President Trump’s “Executive Order on Access to Affordable Life-saving Medications” and would add a requirement to future CHC funding awards under Section 330(e). The new condition of funding would require that the grantee “establish[] practices [to] provide insulin and injectable epinephrine at or below the discounted price paid by the health center grantee or sub-grantee under the 340B Drug Pricing Program (plus a minimal administration fee) to individuals with low incomes, as determined by the Secretary, who have a high cost sharing requirement for either insulin or injectable epinephrine; have a high unmet deductible; or have no health insurance.”

The proposed rule defines certain terms, including:

  • Individuals with low incomes: individuals and families with annual incomes no greater than 350% of the Federal Poverty Guidelines

  • High cost sharing requirement: a cost sharing requirement that exceeds 20% of the amount the health center charges its patients for the drug

  • High unmet deductible: the amount a patient owes toward her high deductible at any time during a plan year in which the outstanding deductible portion exceeds 20% of the total deductible.

Analysis and Takeaways

HRSA’s proposed rule would amend 42 CFR 51c, a section of the federal regulations governing CHC grants, rather than regulations governing the 340B Program at 42 CFR 10. This approach should provide some comfort to 340B Program stakeholders that the requirements of the Executive Order will not be expanded to other 340B covered entity types. However, the limited scope will result in additional administrative burdens on 330(e) grantees and their sub-grantees, as well as reduced grant “program income” to support the programs under their grants. Notably, 330(e) grantees are already required to use any revenue generated from their 340B Program participation to support programs and patients served under their grants.

Based on the comment period and standard rulemaking timeframes, it is unlikely that the proposed rule will be finalized before the beginning of the next presidential term, which begins on January 20, 2021.

© 2020 McDermott Will & EmeryNational Law Review, Volume X, Number 272
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About this Author

Emily J. Cook, McDermott Will Emery Law Firm, Health Care Attorney
Partner

Emily J. Cook is an associate in the law firm of McDermott Will & Emery LLP and is based in the Firm’s Los Angeles office.  She focuses her practice on Medicare provider certification, reimbursement and regulatory compliance.

310-284-6113
Steven J. Schnelle, Mcdermott, healthcare lawyer
Associate

Steven Schnelle focuses his practice on regulatory and transactional matters involving health care providers and suppliers, as well as pharmaceutical firms and medical device manufacturers.

Steven provides counsel on a variety of issues involving the Centers for Medicare and Medicaid Services (CMS), the HHS Office of Inspector General (OIG), the Department of Justice (DOJ), as well as state and local government agencies. He advises private equity firms, investment banks, commercial lenders, and health care and life science companies on health care regulatory issues relating to mergers and acquisitions, securities filings, and financing in the United States. Steven also counsels clients on audits and investigations of health care and life sciences companies, as well as administrative filings and appeals.

While in law school at Georgetown University Law Center, Steven served as an editor of The Georgetown Law Journal.

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Cathy Ren Regulatory & Transactional Attorney McDermott Will & Emery Los Angeles, CA
Associate

Cathy Ren focuses her practice on regulatory and transactional matters affecting a wide range of clients in the healthcare industry, including hospitals, health systems, and other healthcare providers.

While in law school, Cathy was a legal intern at the National Health Law Program in Los Angeles and served as Co-President of the Harvard Health Law Society.

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