HHS seeks to delay controversial community health center 340B insulin rule until July

A bottle of insulin surrounded by a stethescope
HHS wants more time to evaluate a controversial rule that calls on community health centers to pass along 340B savings for insulin directly to patients. (Getty/Samara Heisz)

The Department of Health and Human Services wants to delay the implementation of a final rule that would require community health centers to fully pass on 340B savings for insulin to patients.

The Biden administration filed a proposed delay until July of the effective date of the rule on March 10 in the Federal Register. The delay is part of a freeze implemented by the White House to review and approve last-minute regulations finalized by the Trump administration.

HHS initially sought to delay the implementation date of the rule, originally expected to take effect on Jan. 22, until March 22. Now it wants another delay until July 20 to give the agency “additional opportunity for review and consideration of the new rule,” the filing said.

The agency was concerned about an uproar from stakeholders over the “rule’s administrative requirements, costs of new processes and procedures that would be necessary under the rule, the impact of the establishment of a new income eligibility threshold for health center operations, and overall impact on care delivery and service levels for health center patients,” the regulatory filing said.

HHS was also concerned about comments that the rule could reduce 340B savings for health centers.

The final rule also changed how it considers a low-income individual as at or below 350% of the federal poverty level. However, centers already use a different income threshold of 200% of the poverty level to apply federal requirements for sliding fee discount schedules.

HHS wants another round of comments by March 14.

RELATED: 27 states and D.C. call for HHS to rein in drugmakers over 340B moves after hospital group lawsuit

The additional delay comes amid an escalating feud between 340 B-covered entities and drug companies over access to discounted products.

340B requires drug makers to offer discounts to safety-net providers such as certain hospitals and community health centers in exchange for participation in Medicare and Medicaid.

However, last year several major drug companies restricted access of 340B products to contract pharmacies, which are third-party entities that dispense 340B products on behalf of the covered entity.

HHS did finalize a rule that sets up an administrative dispute resolution process to settle feuds over contract pharmacies and other issues. However, a collection of hospital groups sued HHS to compel the agency to force drugmakers to immediately discontinue the actions, but a federal judge dismissed the suit last month.

This is the latest healthcare rule to be delayed as part of the government-wide regulatory freeze.

In late January, HHS delayed implementation of a final rule until Jan. 1, 2023, that replaces the safe harbor for Medicare Part D drug rebates from the federal anti-kickback statute. The controversial rule creates a new safe harbor for discounts offered at the point-of-sale.