New Proposed Rule Would Require Health Center Grantees to Pass 340B Discounts for Insulin and Injectable Epinephrine to Patients

On September 28, 2020, the U.S. Department of Health and Human Services, through the Health Resources and Services Administration (HRSA), published a notice of proposed rulemaking (NPRM) regarding implementation of Executive Order 13937. The Executive Order, titled “Access to Affordable Lifesaving Medications,” was issued by President Trump on July 24, 2020, as previously reported here. Comments on the NPRM are due October 28, 2020.

The NPRM, if finalized, would condition future grants under section 330(e) of the Public Health Service (PHS) Act to federally qualified health centers that participate in the 340B Drug Discount Program on the health center establishing written practices to provide insulin and injectable epinephrine to certain patients at a price no greater than the 340B ceiling price. The proposed requirement would apply to health center grantees under section 330(e) of the PHS Act, or the subrecipients of such grants, and would include contract pharmacy transactions. HRSA’s proposal would, however, permit a “minimal administration fee” that could be charged in addition to the 340B ceiling price. As part of the proposed definition of the term “minimal administration fee,” the NPRM states that the term “would be expected to include any dispensing fee, counseling costs, and any other charges associated with the patient receiving the medication” and that “health centers should make every reasonable effort to keep the fee as low as possible.”

Under the NPRM, the proposed requirement would apply to patients with annual incomes at or below 350% of the Federal Poverty Guidelines that (a) have a “high cost sharing requirement” for either insulin or injectable epinephrine, (b) have a “high unmet deductible,” or (c) have no health insurance. The NPRM includes proposed definitions for the terms “high cost sharing,” “high unmet deductible,” and “health insurance,” among others.

If finalized, this proposed new condition for section 330(e) health center grantees participating in the 340B Drug Discount Program would be the first time HRSA has imposed a requirement for a 340B covered entity to ensure that the entity’s patients pay no more than the 340B-discounted price for a drug. Prior legislative proposals have considered, and some stakeholders have argued for, imposing a similar requirement under the 340B statute or other types of statutory restrictions on how covered entities must use the profits they receive from 340B discounts; to date, however, no such restrictions have been enacted.  

The NPRM initially was sent to the White House Office of Management and Budget (OMB) as an interim final rule that would take effect immediately, but, following multiple OMB meetings with health center stakeholders, the interim final rule was changed to its current NPRM form with a 30-day public comment period.

For more on other breaking drug pricing related news, visit Sidley’s Global Drug Pricing page.