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.