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HRSA Withdraws 340B Program “Mega-Rule” in Favor of Informal Guidance

on Monday, 15 December 2014 in Health Law Alert: Erin E. Busch, Editor

After a federal court ruled that the Health Resources and Services Administration (HRSA) did not have statutory authority to promulgate regulations on the 340B Drug-Pricing Program’s orphan drug exclusion, the agency has announced it will instead clarify key 340B policy issues through informal guidance.

Prior to that ruling, HRSA planned to publish a “mega-rule” that would have addressed fundamental Program requirements such as who can be considered a “patient” of a provider for purposes of qualifying for 340B-discounted drugs. Following the district court’s decision invalidating HRSA’s regulation on the 340B orphan drug exclusion in May 2014, the agency withdrew the mega-rule. In a recent notice posted to the Office of Pharmacy Affairs website, HRSA stated it will instead issue proposed guidance for notice and comment on the 340B Program measures that would have been clarified in the mega-rule.

In response to a request for comment, a HRSA representative told the Drug Discount Monitor that in light of the court ruling, it “has determined that the best path forward is to issue proposed rules where the [340B] statute is specific about rule-making” and “to issue guidance where interpretation of the statutory requirements is needed to inform the implementation of the Program.”

Thus, the announcement does not affect ongoing rulemaking on certain aspects of the 340B Program. HRSA has express statutory authority to promulgate regulations related to calculation of 340B ceiling prices, administrative dispute resolution, and imposition of civil monetary penalties on manufacturers, and will propose rules on these topics in the coming months. In areas where the 340B statute is ambiguous, however, HRSA will utilize informal guidance to clarify its views.

HRSA’s announcement comes amid continuing scrutiny of the 340B Program’s growth and lack of federal oversight by industry stakeholders. Congress approved a substantial increase in funding for HRSA in the next fiscal year in order to enhance 340B Program integrity efforts.

Whitney C. West

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