HHS moves up start date for manufacturer 340B drug final rule following hospital group lawsuit

Following a lawsuit brought by hospital groups against the agency, the Department of Health and Human Services (HHS) issued a notice stating that it intends to implement a manufacturer 340B final rule previously scheduled to take effect in July 2019 on January 1, 2019. 

The 340B Drug Pricing Program allows drug manufacturers to enter into an agreement to sell outpatient drugs to covered entities at a predetermined price, not exceeding the ceiling cost for the drug.

The final rule stipulates that drug manufacturers will be financially penalized for intentionally overcharging hospitals for drugs purchased through the program. It allows HHS to issue civil monetary penalties of up to $5,000 to drug manufacturers for each instance they overcharge a covered entity.

The final rule was originally scheduled to take effect on March 6, 2017, but its implementation has been delayed several times in response to manufacturer pushback about provisions in the rule and a widespread regulatory freeze under the Trump administration.

According to HHS, the most recent delay was in part due to concerns that implementing the rule could impact actions under American Patients First blueprint—a plan intended to lower drug costs and increase the agency’s focus on drug market competition.

HHS’s decision to move the implementation date up by seven months followed a lawsuit brought by the American Hospital Association (AHA), America’s Essential Hospitals, the Association of the American Medical Colleges, 340B Health, as well as three hospital systems. In the lawsuit, the organizations argue that the nearly two-year delay violates the Administrative Procedure Act, which governs the way federal agencies may propose and establish regulations.