HRSA proposes price ceilings for 340B program

The Health Resources and Services Administration (HRSA) has proposed a new rule that would place a cap on how much drug manufacturers could charge safety-net hospitals participating in the 340B program for drugs intended for outpatient treatment

Under the 340B program, any drug manufacturer that participates in the Medicaid program must provide drugs discounted up to 50 percent to safety-net hospitals.

The proposed rule calls for pharmaceutical manufacturers participating in the 340B program to provide an estimated price for the first three quarters of any new drug they bring to market. If their actual price exceeds the estimate price, the manufacturer would have to issue a rebate to hospitals. 

The HRSA did not give a rationale for the regulation, but prices of new drugs to fight diseases such as hepatitis C have been a major financial strain on Medicaid programs at the state level, with a single regimen costing nearly $100,000 at retail prices. Medicare spending on such drugs zoomed to $4.5 billion last year from just $286 million in 2013. The trend has prompted some observers to say it is no longer sustainable.

Any violations of the price ceilings would lead to a $5,000 fine for each offense, according to the proposed rule.

The proposed rule also addresses the occasional situation when a per-unit rebate under 340B minus the average manufacturer's price for the smallest unit places the drug's ceiling price at zero. In such a scenario, the ceiling price is set at a penny per unit.

The HRSA has concluded that the change would not be "economically significant," which means any impact would be less than $100 million a year to the U.S. economy as a whole.

The proposed rule change is the first to the 340B program since HRSA tried to more tightly regulate the availability of orphan drugs, according to Health Care Law Today. The pharmaceutical sector defeated the regulation in federal court.

To learn more:
- here's the proposed rule (.pdf)
- check out the Health Care Law Today article