On Monday, January 30, 2017, the Department of Health and Human Services Health Resources and Services Administration (“HRSA”) withdrew its 340B Program Omnibus Guidance, also referred to as the “Mega-Guidance.” The guidance would have addressed questions and provided clarifications for enrolled covered entities, drug manufacturers and contract pharmacies participating in the 340B Program. The withdrawal of the 340B Omnibus Guidance comes 10 days after the new federal administration’s regulatory freeze that required that federal agencies not issue any new guidance and regulations, retract guidance and regulations under review by the Office of the Federal Register and postpone released guidance and regulations that have not yet taken effect.
While such a regulatory freeze is fairly routine for an incoming administration, the withdrawal of the “Mega-Guidance” represents another set-back in HRSA’s continued effort to provide clarity regarding 340B Program standards. It remains to be seen whether certain elements of the 340B Omnibus Guidance are released via other subregulatory mechanisms, including HRSA Office of Pharmacy Affairs (“OPA”) or Apexus FAQs, or even HRSA OPA audit findings. For now and for the foreseeable future, though, 340B Program guidance and oversight will continue on its current course.
Background & Discussion
After a series of federal court rulings holding that HRSA lacked the statutory authority to promulgate broad regulations governing the 340B Program, HRSA released the proposed Mega-Guidance for the 340B Program in a non-regulation format on August 28, 2015. The Mega-Guidance addressed standards impacting covered entities, drug manufacturers and contract pharmacies. Some of the key components of the proposed Mega-Guidance addressed the definition of a 340B eligible patient, outpatient status determinations, Disproportionate Share Hospital and 340B “Child Site” eligibility, record retention requirements and contract pharmacy arrangements.
In part because of the wide-ranging subject matter addressed, the proposed Mega-Guidance was met with mixed reviews upon its release. Some manufacturers approved of the tightened standards for patient eligibility, but entities such as hospitals and Medicaid health plans indicated that the guidance limited access to medications and placed restrictions on drugs eligible for discounts.
Possibly in part due to the volume of comments received and their content, and perhaps in response to complicating factors introduced by provisions revising hospital-based payment under the Bipartisan Budget Act of 2015 that were released after the 340B Omnibus Guidance comment period closed, HRSA delayed finalizing the 340B Omnibus Guidance for quite some time. While there were strong indications that HRSA intended to finalize the Mega-Guidance late in 2016, that now will not occur at all.
Practical Takeaways
Certain elements of the 340B Omnibus Guidance were likely to be viewed unfavorably by drug manufacturers and still others unfavorably by 340B Covered Entities. Now, though, 340B Program stakeholders will want to carefully monitor HRSA OPA and Apexus guidance releases, including FAQs, to see whether certain elements of the guidance are released. Unless and until that occurs, 340B Program standards remain primarily impacted by HRSA OPA audit findings that not uncommonly offer insight into HRSA OPA’s enforcement approach.
While HRSA may consider reissuing similar formal guidance in the future, doing so may be more difficult given the recent executive order requiring the elimination of two regulations for each new regulation implemented. Moreover, uncertainty exists regarding the direction of the 340B Program since some elected representatives have indicated they believe the 340B Program has grown beyond its original intent while the new administration has signaled support for mechanisms that would result in lower drug prices. We will therefore continue to monitor any new developments related to the 340B Program.
If you would like additional information about this issue, please contact:
- Todd A. Nova at (414) 721-0464 or tnova@hallrender.com;
- John F. Williams at (202) 370-9585 or jwilliams@hallrender.com;
- Richard B. Davis at (414) 721-0459 or rdavis@hallrender.com; or
- Your regular Hall Render attorney.
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Special thanks to Kristen H. Chang for her assistance with the preparation of this Health Law News article.
