HHS scraps regulations for 340B drug pricing program
- The HHS Health Resources and Services Administration has withdrawn plans to expand its 340B drug pricing program, which requires drug manufacturers to provide outpatient drugs to eligible healthcare organizations and covered entities at significantly reduced prices. However, the agency announced plans to issue new guidance addressing key policy issues beginning in 2015.
- The news comes more than one year after Pharmaceutical Research and Manufacturers of America successfully filed a lawsuit challenging a final HHS rule that expanded the 340B drug discount program: PhRMA filed the suit in an attempt to exclude all drugs with an "orphan" designation—which means the drug has been developed specifically to treat a rare condition and likely carries a hefty price tag—from the final rule.
- With HRSA deciding to scrap what industry folks are calling the "mega rule," hospitals, health systems and drug manufacturers have no choice but to wait for additional guidance on the program.
Although US District Judge Rudolph Contreras in 2013 ruled that HHS lacks the authority to put in place regulations implementing 340B provisions, HRSA re-issued the rule allowing 340B-covered entities to purchase orphan drugs at 340B prices, if the drugs are used for reasons other than treating the rare condition for which it was given the designation, and PhRMA filed a second suit in October.
Pharmaceutical companies say the rule, which is ostensibly meant to encourage orphan drug development while giving hospitals access to important drugs for the medically needy, amounts to an unsustainable financial hit for companies that invest in pricey orphan drugs.
Trade groups representing safety net providers had a different take on the lawsuit. "Once again, big pharma is trying to increase its prices at the expense of rural and cancer hospitals and their patients," said Ted Slafsky, head of the Safety Net Hospitals for Pharmaceutical Access. "These providers depend on 340B savings to serve needy patients and, in many cases, to keep their doors open."
As American American Hospital Association Executive Vice President Rick Pollack said late last week, the 340B drug pricing program, created by the Veterans Health Care Act of 1992, "is vital to so many vulnerable patients and communities."
But because the program is highly controversial—and at least one study has suggested that hospitals have begun using the program to boost profits rather than help low-income and uninsured patients—HHS was probably smart to hit the pause button.
- Becker's Hospital Review HHS withdraws 340B 'mega rule'