Health Reform WK-EDGE HHS again delays effective date of 340B ceiling price, CMP regulations
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Tuesday, May 30, 2017

HHS again delays effective date of 340B ceiling price, CMP regulations

By Susan Smith, J.D., M.A.

After consideration of comments received regarding the effective date for the 340B Drug Pricing Program ceiling price and manufacturer’s civil money penalties (CMPs) regulations, HHS has further delayed the effective date from May 22, 2017, to October 1, 2017. HHS is delaying enforcement to October 31, 2017, to correspond with the new effective date of the regulations. Although a number of commenters supported the May 22, 2017, effective date expressing concerns about lack of oversight, regulation, and enforcement, HHS disagreed. According to HHS, the delay of the effective date provides stakeholders sufficient time to implement and comply with the new program requirements and is particularly important when the effective date is paired with potential CMPs (Final rule, 82 FR 22893, May 19, 2017).

340B program. The 340B program, under 42 U.S.C. §256b, is based upon pharmaceutical pricing agreements (PPAs) entered into between HHS and certain drug manufacturers. When a drug manufacturer enters into a PPA, the manufacturer agrees to charge 340B covered entities for covered outpatient drugs at prices that do not exceed ceiling prices. The ceiling prices are based upon quarterly pricing data from CMS.

Ceiling price and CMPs. The Final rule (82 FR 1210, January 20, 2017) requires manufacturers to calculate the 340B ceiling price for each covered outpatient drug on a quarterly basis. The 340B ceiling price is equal to the average manufacturer price from the preceding calendar quarter for the smallest unit of measure, using the Unit Rebate Amount. Additionally, a manufacturer must estimate the 340B ceiling price for a new covered outpatient drug as of the date the drug is first available for sale. The Final rule also establishes that any manufacturer with a PPA that knowingly and intentionally charges a covered entity more than the ceiling price for a covered outpatient drug may be subject to a civil money penalty of up to $5,000 for each instance of overcharging, as mandated by Section 7102 of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) (see 340B gets teeth with CMPs, January 5, 2017).

Delays of effective date. The Final rule originally had a March 6, 2017 effective date; however, the preamble stated that enforcement was not to begin until the beginning of the second quarter. HHS issued a subsequent Final rule (82 FR 12508, March 6, 2017) pursuant to the new administration’s regulatory freeze that postponed the effective date until March 21, but the postponement did not affect the April 1 enforcement date. On March 20, 2017, HHS issued another Interim final rule (82 FR 14332) delaying the effective date until May 22, 2017, and soliciting comments on whether the effective date should be further delayed until October 1, 2017 (see 340B rule sinks deeper into regulatory freezeMarch 23, 2017).

FederalRegisterIssuances: FinalRules 340BNews DrugNews MedicaidNews PharmaServicesNews ProgramIntegrityNews NewsFeed

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