After more than eight years in the making, the 340B Drug Pricing Program Ceiling Price and Manufacturer Civil Monetary Penalties Regulation (the “Rule”) seems to be a rudderless ship on a shoreless sea. On Monday, the Health Resources and Services Administration (HRSA) issued a notice of proposed rulemaking delaying the implementation date of the final Rule from July 1, 2018 to July 1, 2019. The final Rule was published eighteen months ago (January 5, 2017) and the implementation date has since been delayed on four different occasions. HRSA has cited a variety of reasons for each delay—compliance with the Regulatory Freeze issued by the incoming Trump Administration; providing stakeholders additional time to prepare for compliance with the Rule; yet more time for compliance preparations; and additional time for HRSA to “fully consider the substantial questions of fact, law, and policy raised by the [R]ule.”

For this fifth and most recent delay, HRSA stated that implementation of the final Rule would be “counterproductive” in light of HRSA’s intention to “engage in additional or alternative rulemaking[s] on these issues.” See 83 FR 20008, May 5, 2018. Notably, these additional/alternative rulemakings are linked to broader Health and Human Services’ efforts to “develop[] new comprehensive policies to address the rising costs of prescription drugs” in government programs such as “Medicare Parts B & D, Medicaid, and the 340B discount drug program.” Id. at 5.

However, linking the intended additional regulatory activity to the broader efforts to address drug pricing is curious in light of the HRSA’s limited rulemaking authority. See PhRMA v. HHS, 43 F. Supp. 3d 28 (D.D.C. 2014). Since Judge Contreras determined that HRSA’s rulemaking authority is limited to (1) establishment of an alternative dispute resolution process; (2) defining standards of methodology to calculate ceiling prices; and (3) imposition of civil monetary penalties, HRSA has not completed a rulemaking or regulatory issuance. See id. (vacating the Orphan Drug Rule); PhRMA v. HHS, 138 F. Supp. 3d 31 (D.D.C. 2015) (vacating the subsequent Orphan Drug Interpretive Rule); Office of Management and Budget, RIN: 0906-AB08 (Jan. 30, 2017) (withdrawing the 340 Program Omnibus Guidance); 340B Ceiling Price and CMP Rule, 3 FR 20008 (delaying implementation until July 1, 2019).

It is unclear whether the most recent delay means that the 340B Ceiling Price and CMP Rule is doomed to join the wreckage of its 340B regulatory brethren. However, this most recent update from HRSA indicates three things: (1) stakeholders are still operating in the pre-2015 framework; (2) the debate over the 340B program’s role in drug pricing is sure to continue; and (3) further challenges to HRSA’s regulatory authority may be on the horizon.

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Photo of Jennifer Plitsch Jennifer Plitsch

Jennifer Plitsch leads the firm’s Government Contracts Practice Group, where she works with clients on a broad range of issues arising from both defense and civilian contracts including contract proposal, performance, and compliance questions as well as litigation, transactional, and legislative issues.

She…

Jennifer Plitsch leads the firm’s Government Contracts Practice Group, where she works with clients on a broad range of issues arising from both defense and civilian contracts including contract proposal, performance, and compliance questions as well as litigation, transactional, and legislative issues.

She has particular expertise in advising clients on intellectual property and data rights issues under the Federal Acquisition Regulations (FAR) and obligations imposed by the Bayh-Dole Act, including march-in and substantial domestic manufacturing. Jen also has significant experience in negotiation and compliance under non-traditional government agreements including Other Transaction Authority agreements (OTAs), Cooperative Research and Development Agreements (CRADAs), Cooperative Agreements, Grants, and Small Business Innovation Research agreements.

For over 20 years, Jen’s practice has focused on advising clients in the pharmaceutical, biologics and medical device industry on all aspects of both commercial and non-commercial agreements with various government agencies including:

  • the Department of Veterans Affairs (VA);
  • the Department of Health and Human Services (HHS), including the Biomedical Advanced Research and Development Authority (BARDA), the National Institutes of Health (NIH), and the Centers for Disease Control (CDC);
  • the Department of Defense (DoD), including the Defense Threat Reduction Agency (DTRA), the Defense Advanced Research Projects Agency (DARPA), and the Joint Program Executive Office for Chemical Biological Defense (JPEO-CBRN); and
    the U.S. Agency for International Development (USAID).

She regularly advises on the development, production, and supply to the government of vaccines and other medical countermeasures addressing threats such as COVID-19, Ebola, Zika, MERS-CoV, Smallpox, seasonal and pandemic influenza, tropical diseases, botulinum toxin, nerve agents, and radiation events. In addition, for commercial drugs, biologics, and medical devices, Jen advises on Federal Supply Schedule contracts, including the complex pricing requirements imposed on products under the Veterans Health Care Act, as well as on the obligations imposed by participation in the 340B Drug Pricing program.

Jen also has significant experience in domestic sourcing compliance under the Buy American Act (BAA) and the Trade Agreements Act (TAA), including regulatory analysis and comments, certifications, investigations, and disclosures (including under the Acetris decision and Biden Administration Executive Orders). She also advises on prevailing wage requirements, including those imposed through the Davis-Bacon Act and the Service Contract Labor Standards.