On November 13, 2014, the Health Resources and Services Administration (“HRSA”) withdrew a proposed rule (known as the “340B mega-reg”) intended to establish comprehensive 340B Drug Pricing Program requirements for participating covered entities and manufacturers.  The rule was originally expected to publish for notice and comment in June 2014, and was expected to address key issues such as the definition of an eligible patient, contract pharmacy arrangements, hospital eligibility criteria, and eligibility of off-site facilities.

The decision to withdraw the mega-reg is not surprising, given a district judge’s ruling that Congress had “not given HHS the broad rulemaking authority” to carry out the implementation of the 340B Program.  Importantly, the ruling did not address whether HRSA could permissibly issue an “interpretative” rule to clarify 340B requirements, nor whether HRSA could issue guidance documents attempting to do so.

Thus, in place of a mega-reg, HRSA announced that it plans to issue 340B guidance on “key policy issues” in 2015.  It will publish rules only on the three narrow issues authorized by the statute—rules pertaining to civil monetary penalties for manufacturers, calculations of the 340B ceiling price, and administrative dispute resolution.

As with HRSA’s interpretive rule on the 340B orphan drug exclusion, which it issued shortly after the district court’s ruling, any  guidance documents  issued will not have the force and effect of law, nor impose any binding requirements beyond those already established by relevant statutes.  Although HRSA has recognized these limitations in promulgating its interpretive rule,  it has also taken preliminary action to enforce the interpretive rule and underscored that  failure to comply with relevant statutes may result in “termination of a manufacturer’s Pharmaceutical Pricing Agreement (PPA)”—meaning, exclusion of the manufacturer from participating in federal healthcare programs including Medicaid.

Pharmaceutical Research and Manufacturers of America (“PhRMA”) has filed suit seeking to invalidate HRSA’s interpretative rule on the orphan drug exclusion.  This suit may have important implications on the impact of the envisioned 340B guidance document.  If the district court sides with HRSA, it may be able to impose its interpretation of the statute through the threat of enforcement, raising the risks for affected entities that disagree with HRSA’s interpretation.

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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.