HHS 340B rule delay would put hospitals at risk for high drug prices

Safety-net hospitals urged HHS not to postpone a rule setting new ceiling prices for the 340B drug discount program, saying the delay would leave them defenseless against rising costs.

Although HHS was supposed to set ceiling prices starting July 1, the agency wants to hold off on the rule for a year. The request is the fifth time the rule has been postponed, and providers had until Tuesday to comment on the proposal.

Hospitals that provide a significant amount of care to low-income patients or serve rural communities are eligible for 340B drug discounts. These hospitals also tend to have high amounts of uncompensated care and an increased chance of negative operating margins, according to Michael Rodgers, senior vice president at the Catholic Health Association.

Failing to set drug ceiling prices means that 340B hospitals "do not have an effective means to challenge manufacturers they suspect of overcharging," Rodgers said in a comment letter.

Prescription drug prices rose 24.9% overall from 2012 and 2016, according to the Health Care Cost Institute

"Within the context of the 340B program, covered entities are blind to overcharges by drug manufacturers and have no means of accessing ceiling price information," Dr. Bruce Siegel, president of America's Essential Hospitals, said in a comment letter.

HHS wants to postpone the rule, which was initially proposed under the Obama administration, because it is unclear whether the regulation as outlined is legal.

"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 rulemaking.

Drugmakers said they support the delay and agreed the Trump administration should not finalize it if there are legal concerns. GlaxoSmithKline and others in the industry have also said the rule in its current form is vague and overly burdensome.

For instance, the proposed rule calls for HHS to impose civil money penalties (CMPs) against manufacturers if they don't comply with the ceilings, but it doesn't provide clear standards for imposing these penalties, according to John Boone, vice president of contract management and operations at GlaxoSmithKline.

"This omission contravenes the 340B law which expressly authorizes CMPs only if concrete regulatory standards for imposing them are first established and it would unfairly heighten risk for manufacturers that participate in 340B," Boone said in a comment letter.

An edited version of this story can also be found in Modern Healthcare's May 28 print edition.