HHS has finalized plans to roll out the long-awaited final rule for the 340B drug discount program, which would set price ceilings and monetary penalties at the beginning of next year.
The Department of Health and Human Services Health Resources and Services Administration issued a final rule (PDF) on Thursday that formally sets the start of the penalties and price ceilings for Jan. 1. Beginning that day, HRSA will set price ceilings for drugs in the program and will punish pharmaceutical companies that knowingly overcharge for these medications.
The rule was delayed five times under the Trump administration. HRSA issued a proposed rule last month where it revealed it implement the penalties and price ceilings in January.
HHS’ most recent delay of the rule was to ensure that enacting it would not get in the way of the agency’s work to bring down drug prices, as outlined in its May blueprint. HHS has since decided that the rule would not be a hindrance.
“HHS has determined that the finalization of the 340B ceiling price and civil monetary penalty rule will not interfere with HHS’s development of these comprehensive policies,” the agency said in the final rule. “Accordingly, HHS no longer believes a delay in the effective date is necessary.”
RELATED: Hospitals, drug companies and oncology patients are in an uneasy financial dance
Four national healthcare groups sued HHS in September over the implementation delays. The American Hospital Association, America’s Essential Hospitals, the Association of American Medical Colleges and 340B Health all signed on to the suit, which argued that the nearly two-year delay was illegal.
The AHA said in a statement that it is “pleased” with the agency’s response to the suit. The next step, it said, is to ensure that the price ceilings are quickly posted online.
“We continue to strongly urge HHS to make available online drug pricing information for 340B hospitals as soon as possible after Jan. 1, and no later than April 1, so that drug company overcharging can be uncovered and penalties enforced,” Tom Nickels, AHA’s executive vice president for government relations and public policy, said.
340B Health, a coalition of more than 1,300 hospitals participating in the drug discount program, also praised the final rule, saying it was “long overdue” and that drugmakers have had plenty of time to prepare for the penalties as Congress first mandated them nearly a decade ago.
RELATED: Hospitals, pharmaceutical companies spar over cuts to 340B drug discount program
It echoed AHA in calling for the department to put the ceiling price website up as soon as possible after the new year.
“We look forward to working with HHS and HRSA as they prepare to get the ceiling price website online and ensure that drug manufacturers are held to the standards that Congress required,” Maureen Testoni, interim president and CEO, said.
Though putting the price ceilings and penalties in place resolves one piece of 340B-related litigation, the AHA, AAMC and AEH also sued the department over its changes to the payment rate in the program. In late 2017, the Centers for Medicare & Medicaid Services changed the rate from up to 6% above the average sales price for a drug to 22.5% less than average sales price.
The changes cut $1.6 billion in drug discount payments. The court challenge from hospital groups over the cuts is ongoing.