December 7, 2018

HHS Implements Drug Price Ceiling Rule and Civil Penalties for 340B

After delaying the effective date on five separate occasions, the U.S. Department of Health and Human Services (HHS) has sought to implement a final rule that outlines the parameters for calculating 340B ceiling prices and civil monetary penalties for manufacturers who knowingly over charge covered entities.

You may recall that several hospital groups sued the Trump Administration back in September for the continued delay in rulemaking. Prior to changing the effective date, the Health Resources and Services Administration (HRSA), the federal agency tasked with overseeing 340B, asked a federal court to put the lawsuit on hold. The federal district court in Washington D.C. declined to do so with Judge John Bates stating “HHS cannot guarantee that the proposed rule advancing the effective date will become final at all, as HHS is required to consider any comments made before it issues a final rule” according to reports from InsideHealthPolicy.

Here are some highlights of the final rule verbatim:

  • Implements civil monetary penalties (CMPs) for manufacturers who knowingly and intentionally charge a covered entity more than the ceiling price for a covered outpatient drug
  • Clarifies the requirement that manufacturers must calculate the 340B ceiling price on a quarterly basis and provides guidance on the calculation methodology
  • Establishes requirement that a manufacturer charge $0.01 for drugs when the ceiling price calculation is zero

Tom Nickels, Executive Vice President at the American Hospital Association (AHA) quickly applauded HHS for implementing the final rule. However, the AHA and other hospital groups continue to express concern about cuts to 340B that were finalized in the CY2019 Medicare Outpatient Prospective Payment System (OPPS) final rule.

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