The National Law Forum

The Blog of the The National Law Review

Health Resources and Services Administration (HRSA) Withdraws 340B Program Proposed Rule

Mcdermott Will Emery Law Firm

On November 14, 2014, the U.S. Department of Health and Human Services (HHS) Health Resources and Services Administration (HRSA) withdrew a proposed rule that would have provided guidance on a variety of topics related to the 340B Federal Drug Pricing Program.  The “mega rule,” which had been submitted to the White House Office of Management and Budget in April 2014, was expected to cover important 340B Program matters, such as patient eligibility, contract pharmacy arrangements, and eligibility for hospitals and off-site facilities.  Now, in lieu of the proposed rule, HRSA has announced its intention to release notice-and-comment guidance to “address key policy issues raised by various stakeholders committed to the integrity” of the 340B Program.  Additionally, HRSA plans to issue proposed rules related to civil monetary penalties for manufacturers, calculating the 340B ceiling price and administrative dispute resolution.

The decision to withdraw the proposed rule, coupled with HRSA’s intention to release regulatory guidance on similar issues, may be viewed as a response by HHS to a recent federal court decision limiting HHS’s ability to promulgate notice-and-comment rules.  In a May 23, 2014, decision, the U.S. District Court for the District of Columbia held that HHS did not have the requisite statutory authority to promulgate a notice-and-comment rule pertaining to the purchase of orphan drugs by certain Covered Entities.  Further, the withdrawal may indicate a decision by HRSA to scale back its issuance of notice-and-comment rules for the 340B Program, limiting formal rulemaking to areas where the statutory authority to do so is explicit.  The withdrawal of the proposed mega rule demonstrates HRSA’s position that it does not possess the broad authority necessary to issue a formal rule of this scope.

Without the proposed rule, important facets of the 340B Program remain uncertain.  Manufacturers and Covered Entities that sought guidance on key practical issues such as patient definition now must continue to wait for clarification.  As noted, going forward HRSA will seek to clarify “key policy issues” but has yet to announce whether the topics covered by the proposed rule will be addressed.  HRSA’s regulatory guidance on these issues may never come, however, if the U.S. District Court for the District of Columbia (which is hearing further briefing on the aforementioned case concerning HHS’s regulatory guidance on the orphan drug rule) further restricts HHS’s ability to issue guidance.

In the face of continuing uncertainty, 340B Program participants, including Covered Entities, should stay current and closely follow available guidance from HRSA and the 340B Prime Vendor (Apexus).  Until clear guidance has been issued pertaining to subjects such as patient definition and contract pharmacy compliance, 340B Program participants should continue to follow and document best practices to ensure compliance with all 340B Program requirements.

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