HHS proposes yearlong delay for 340B rule

(Story updated at 3:00 p.m. ET) The HHS is proposing to delay a rule that would set new drug ceiling prices in the 340B drug discount program. It would be the fifth time the rule has been postponed.

It was supposed to start July 1. Comments on the proposal to delay the start date are due on May 25.

But it may not ever be implemented. In the proposed rule issued Friday, HHS said it had significant questions of fact, law and policy about the Obama-era regulation. The delay will give it more time to explore those concerns, the agency said.

"Requiring manufacturers to make targeted and potentially costly changes to pricing systems and business procedures to comply with a rule that is under further consideration would be disruptive," HHS said in the rule-making.

In addition to setting new drug ceiling prices, the rule would allow HHS to levy fines against drug manufacturers that intentionally charge a hospital more than the ceiling price.

Hospitals were disappointed by the proposal.

"We urge the agency to implement this final rule without any further delay to shine needed light on drug company price increases," Tom Nickels, executive vice president at the American Hospital Association said in a statement. "The irony is not lost on us that drug companies continue to push for increased reporting for hospitals and others while resisting any transparency on their part," he added.

Hospitals said the rule was key to stopping drug companies from hiking up their prices.

"There is a clear history of manufacturers overcharging 340B providers," Maureen Testoni, interim president of 340B Health said in a statement. "Absent enforcement of the pricing provisions of the law, hospitals and other covered entities do not have any significant remedy to address suspected 340B overcharges."

The 340B program requires companies to sell drugs to safety-net hospitals at prices well below the Medicare reimbursement rate. The hospitals, in turn, are allowed to collect the standard rate (average sales price plus 6%) from the CMS. The program is intended to help fund resources to safety-net providers so they can offer much-needed services such as medication adherence programs and paying for individual case managers, which help keep people out of the hospital.

A separate 340B-related rule that is the subject of litigation between hospitals and HHS was finalized last year and went into effect Jan. 1. That policy cut $1.6 billion from the program which in 2015, provided about $6 billion in additional revenue to over 37,000 340B provider sites.