- After years of delay, HHS finalized a rule Thursday that will impose a ceiling price to limit how much drug manufacturers can charge hospitals participating in the 340B drug discount program for their products, as well as civil monetary penalties for manufacturers charging above the ceiling.
- The rule will take effect Jan. 1, as opposed to the previously-proposed July 2019 start date. HHS has delayed the implementation of the rule five times, much to the chagrin of hospitals, which have responded by taking legal action against the department. The implementation of a ceiling and civil monetary penalties is just one of many controversies surrounding the oft-disputed drug pricing program.
- While hospital groups and advocates have lauded the decision, the American Hospital Association continues to push HHS to do more, with executive vice president Tom Nickels urging the department to "make available online drug pricing information for 340B hospitals as this rule requires as soon as possible after January 1, and no later than April 1, so that instances of drug company overcharging can be uncovered and penalties enforced."
HHS proposed the rule earlier this month, and while hospital groups applauded the proposal at the time, they remained cautious in their optimism considering the government's history of postponing a decision. The department has explained the delays by saying more time is needed to carefully develop a solution to the regulation.
This recent rulemaking was likely in response to a lawsuit filed by AHA, the Association of American Medical Colleges, America's Essential Hospitals (AEH) and advocacy group 340B Health in September asking the court to declare the department's delay in implementing the regulation unlawful. The groups also asked the court to order HHS to finalize a rule within 30 days.
AEH president Bruce Siegel, whose organization represents many hospitals whose bottom lines depend on the drug pricing program, welcomed the rule in a statement.
"This rule is good for patients and for essential hospitals, which rely on 340B savings to make affordable drugs and health care services available to vulnerable people and underserved communities," Siegel said. "It also ends years of delay for much-needed measures to hold drug companies accountable for knowingly overcharging covered entities in the 340B program."
Proponents of the rule, while satisfied with the implementation date, now await the launch of a ceiling price website, which will act as a transparency mechanism and necessary bargaining chip for 340B hospitals.
"The next step toward ensuring true 340B drug maker transparency is for the administration to launch its ceiling price website so hospitals, clinics, and health centers can ascertain that they are paying the correct amounts for 340B medications," Maureen Testoni, interim president and CEO of 340B Health, said in a statement. "We are encouraged that HHS says it will release that pricing reporting system shortly and that the department will communicate additional updates through its website."
The pharmaceutical industry is not as razzed. PhRMA, the drugmaker lobby, had expressed disappointment when this rule was proposed a month ago, arguing that it places "significant burden and risk" on drug manufacturers that participate in the program.
HHS, the group said at the time, "failed to take into account the extensive public comments indicating this rule's flawed policies" and decided to move up the deadline by six months "without good cause or justification."
The group has also supported the launch of a 340B ceiling price database, as long as it places no extra burden on manufacturers. "It was our hope that this Administration’s first 340B regulation would move away from market distorting policies, not finalizing such costly and burdensome policies," it said.