[Federal Register Volume 83, Number 213 (Friday, November 2, 2018)]
[Proposed Rules]
[Pages 55135-55137]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-24057]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
42 CFR Part 10
RIN 0906-AB19
340B Drug Pricing Program Ceiling Price and Manufacturer Civil
Monetary Penalties Regulation
AGENCY: Health Resources and Services Administration, HHS.
ACTION: Notice of proposed rulemaking; effective date change.
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SUMMARY: The Health Resources and Services Administration (HRSA)
administers section 340B of the Public Health Service Act (PHSA), which
is referred to as the ``340B Drug Pricing Program'' or the ``340B
Program.'' HRSA published a final rule on January 5, 2017, that set
forth the calculation of the 340B ceiling price and application of
civil monetary penalties.
On June 5, 2018, HRSA published a final rule that delayed the
effective date of the 340B ceiling price and civil monetary rule until
July 1, 2019, to allow a more deliberate process of considering
alternative and supplemental regulatory provisions and to allow for
sufficient time for additional rulemaking. After further consideration
of the issue, the Department of Health and Human Services (HHS or
Department) proposes to cease any further delay of the rule and change
the effective date from July 1, 2019, to January 1, 2019.
DATES: Submit comments on or before November 23, 2018
ADDRESSES: You may submit comments, identified by the Regulatory
Information Number (RIN) 0906-AB19, by any of the following methods.
Please submit your comments in only one of these ways to minimize the
receipt of duplicate submissions. The first is the preferred method.
Federal eRulemaking Portal: http://www.regulations.gov.
Follow instructions for submitting comments. This is the preferred
method for the submission of comments.
Email: [email protected]. Include 0906-AB19 in the
subject line of the message.
Mail: Office of Pharmacy Affairs (OPA), Healthcare Systems
Bureau (HSB), Health Resources and Services Administration (HRSA), 5600
Fishers Lane, Mail Stop 08W05A, Rockville, MD 20857.
All submitted comments will be available to the public in their
entirety. Please do not submit commercial confidential information or
personal identifying information that you do not want in the public
domain.
FOR FURTHER INFORMATION CONTACT: CAPT Krista Pedley, Director, OPA,
HSB, HRSA, 5600 Fishers Lane, Mail Stop 08W05A, Rockville, MD 20857, or
by telephone at 301-594-4353.
SUPPLEMENTARY INFORMATION:
I. Background
HHS published a notice of proposed rulemaking (NPRM) in June 2015
to implement civil monetary penalties (CMPs) for manufacturers who
knowingly and intentionally charge a covered entity more than the
ceiling price for a covered outpatient drug; to provide clarity
regarding the requirement that manufacturers calculate the 340B ceiling
price on a quarterly basis and how the ceiling price is to be
calculated; and to establish the requirement that a manufacturer charge
a $.01 (penny pricing policy) for drugs when the ceiling price
calculation equals zero (80 FR 34583, (June 17, 2015)). The public
comment period closed on August 17, 2015, and HRSA received 35
comments. After review of the initial comments, HHS reopened the
comment period (81 FR 22960, (April 19, 2016)) to invite additional
comments on the following areas of the NPRM: 340B ceiling price
calculations that result in a ceiling price that equals zero (penny
pricing); the methodology that manufacturers use when estimating the
ceiling price for a new covered outpatient drug; and the definition of
the ``knowing and intentional'' standard to be applied when assessing a
CMP for manufacturers that overcharge a covered entity. The comment
period closed May 19, 2016, and HHS received 72 comments.
On January 5, 2017, HHS published a final rule in the Federal
Register (82 FR 1210, (January 5, 2017)). Comments from both the NPRM
and the reopening notice were considered in the development of the
final rule. The provisions of that rule were to be effective March 6,
2017; however, through a series of rules, HHS delayed the effective
date of the January 5, 2017 final rule until July 1, 2019 (83 FR 25943,
June 5, 2018).
II. Proposal To Change the Effective Date of the Final Rule From July
1, 2019, to January 1, 2019
HHS proposes to cease any further delay of the January 5, 2017
final rule and to change the effective date from July 1, 2019, to
January 1, 2019. As the effective date will be the first day of the
quarter, the implementation date and the effective date will be the
same. In its most recent rulemaking delaying the effective date of the
January 5, 2017 final rule, HHS stated that it ``is developing new
comprehensive policies to address the rising costs of prescription
drugs. These policies will address drug pricing in government programs,
such as Medicare Parts B & D, Medicaid, and the 340B Program. Due to
the development of these comprehensive policies, we are delaying the
effective date for the January 5, 2017, final rule to July 1, 2019.''
(83 FR 25944)
The Department has determined that the finalization of the 340B
ceiling price and civil monetary penalty rule will not interfere with
the Department's development of these comprehensive policies.
Accordingly, the Department no longer believes a delay in the effective
date is necessary and is proposing to change the effective date of the
rule from July 1, 2019, to January 1, 2019.
The provisions included in the January 5, 2017 final rule were
subject to extensive public comment, and have been delayed several
times. As such, HHS believes that it has considered the full range of
comments on the substantive issues in the January 5, 2017 final rule.
HHS believes that finalization of this proposed change to the
effective date of the January 5, 2017 final rule would satisfy its
obligation to implement the statutory provisions enacted by Congress in
2010 to create civil monetary penalties.
HHS seeks public comments specifically regarding the impact of
ceasing any further delay of the January 5, 2017 final rule, including
any potential disruptions to implementation, and changing the effective
date from July 1, 2019, to January 1, 2019.
HHS encourages all stakeholders to provide comment on this proposed
rule. A comment period of 21 days is sufficient to provide affected
parties the opportunity to provide their views as this rule is
uncomplicated and simply
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proposes to change an effective date. Moreover, affected parties have
had multiple opportunities to provide comments on the appropriate
effective date of the January 5, 2017 final.
III. Regulatory Impact Analysis
HHS has examined the effects of this proposed rule as required by
Executive Order 12866 on Regulatory Planning and Review (September 30,
1993), Executive Order 13563 on Improving Regulation and Regulatory
Review (January 8, 2011), the Regulatory Flexibility Act (September 19,
1980, Pub. L. 96-354), the Unfunded Mandates Reform Act of 1995 (Pub.
L. 104-4), and Executive Order 13132 on Federalism (August 4, 1999).
Executive Orders 12866, 13563, and 13771
Executive Orders 12866 and 13563 direct agencies to assess all
costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distributive impacts, and equity). Executive
Order 13563 is supplemental to and reaffirms the principles,
structures, and definitions governing regulatory review as established
in Executive Order 12866, emphasizing the importance of quantifying
both costs and benefits, of reducing costs, of harmonizing rules, and
of promoting flexibility.
Section 3(f) of Executive Order 12866 defines a ``significant
regulatory action'' as an action that is likely to result in a rule:
(1) Having an annual effect on the economy of $100 million or more in
any 1 year, or adversely and materially affecting a sector of the
economy, productivity, competition, jobs, the environment, public
health or safety, or state, local, or tribal governments or communities
(also referred to as ``economically significant''); (2) creating a
serious inconsistency or otherwise interfering with an action taken or
planned by another agency; (3) materially altering the budgetary
impacts of entitlement grants, user fees, or loan programs or the
rights and obligations of recipients thereof; or (4) raising novel
legal or policy issues arising out of legal mandates, the President's
priorities, or the principles set forth in the Executive Order. A
regulatory impact analysis (RIA) must be prepared for major rules with
economically significant effects ($100 million or more in any 1 year),
and a ``significant'' regulatory action is subject to review by the
Office of Management and Budget (OMB).
HHS does not believe that the proposal to change the effective date
of the January 5, 2017 final rule from July 1, 2019, to January 1,
2019, will have an economic impact of $100 million or more in any 1
year, and is therefore not designated as an ``economically
significant'' proposed rule under section 3(f)(1) of Executive Order
12866. The 340B Program as a whole creates significant savings for
entities purchasing drugs through the program, with total purchases
estimated to be $19 billion in CY 2017. This proposed rule to implement
the January 5, 2017 proposed rule would codify current policy, some of
which have been modified regarding calculation of the 340B ceiling
price and manufacturer civil monetary penalties. HHS does not
anticipate that the imposition of civil monetary penalties would result
in significant economic impact.
When the 2017 Rule was finalized, it was described as not
economically significant. Therefore, changing the effective date of the
2017 Rule is also not likely to have an economically significant
impact.
Specifically, the RIA for the 2017 Rule stated that, ``[. . .]
manufacturers are required to ensure they do not overcharge covered
entities, and a civil monetary penalty could result from overcharging
if it met the standards in this final rule. HHS envisions using these
penalties in rare situations. Since the Program's inception, issues
related to overcharges have been resolved between a manufacturer and a
covered entity and any issues have generally been due to technical
errors in the calculation. For the penalties to be used as defined in
the statute and in this [2017] rule, the manufacturer overcharge would
have to be the result of a knowing and intentional act. Based on
anecdotal information received from covered entities, HHS anticipates
that this would occur very rarely if at all.'' Since the civil
penalties envisioned in the 2017 Rule were expected to be rare,
changing the effective date of these civil penalties is unlikely to
have an economically significant impact.
Executive Order 13771 (January 30, 2017) requires that the costs
associated with significant new regulations ``to the extent permitted
by law, be offset by the elimination of existing costs associated with
at least two prior regulations.'' This rule is not subject to the
requirements of Executive Order 13771 because this rule results in no
more than de minimis costs.
HHS is seeking specific comments on the potential financial and
other impact on covered entities and manufacturers if the final rule
were effective on January 1, 2019.
The Regulatory Flexibility Act (RFA)
The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) (RFA) and the
Small Business Regulatory Enforcement and Fairness Act of 1996, which
amended the RFA, require HHS to analyze options for regulatory relief
of small businesses. If a rule has a significant economic effect on a
substantial number of small entities, the Secretary must specifically
consider the economic effect of the rule on small entities and analyze
regulatory options that could lessen the impact of the rule. HHS will
use an RFA threshold of at least a three percent impact on at least
five percent of small entities.
The proposed rule would affect drug manufacturers (North American
Industry Classification System code 325412: Pharmaceutical Preparation
Manufacturing). The small business size standard for drug manufacturers
is 750 employees. Approximately 600 drug manufacturers participate in
the Program. While it is possible to estimate the impact of the
proposed rule on the industry as a whole, the data necessary to project
changes for specific manufacturers or groups of manufacturers were not
available, as HRSA does not collect the information necessary to assess
the size of an individual manufacturer that participates in the 340B
Program. For purposes of the RFA, HHS considers all health care
providers to be small entities either by virtue of meeting the Small
Business Administration (SBA) size standard for a small business, or
for being a nonprofit organization that is not dominant in its market.
The current SBA size standard for health care providers ranges from
annual receipts of $7 million to $35.5 million. As of January 1, 2017,
over 12,000 covered entities participate in the 340B Program, which
represent safety-net healthcare providers across the country. HHS has
determined, and the Secretary certifies that this proposed rule will
not have a significant impact on the operations of a substantial number
of small manufacturers; therefore, we are not preparing an analysis of
impact for the purposes of this RFA. HHS estimates that the economic
impact on small entities and small manufacturers will be minimal and
less than 3 percent. HHS welcomes comments concerning the impact of
this proposed rule on small manufacturers and small health care
providers.
HHS also seeks comments on any impacts of affected parties to
reduce by
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six months, the effective date of the 2017 final rule from July 1, 2019
to January 1, 2019.
Unfunded Mandates Reform Act
Section 202(a) of the Unfunded Mandates Reform Act of 1995 requires
that agencies prepare a written statement, which includes an assessment
of anticipated costs and benefits, before proposing ``any rule that
includes any Federal mandate that may result in the expenditure by
State, local, and Tribal governments, in the aggregate, or by the
private sector, of $100 million or more (adjusted annually for
inflation) in any one year.'' In 2018, that threshold is approximately
$150 million. HHS does not expect this rule to exceed the threshold.
Executive Order 13132--Federalism
HHS has reviewed this proposed rule in accordance with Executive
Order 13132 regarding federalism, and has determined that it does not
have ``federalism implications.'' This rule would not ``have
substantial direct effects on the States, or on the relationship
between the national government and the States, or on the distribution
of power and responsibilities among the various levels of government.''
The proposal to rescind the June 5, 2018 final rule and make the
January 5, 2017 final rule effective as of January 1, 2019 would not
adversely affect the following family elements: Family safety, family
stability, marital commitment; parental rights in the education,
nurture, and supervision of their children; family functioning,
disposable income or poverty; or the behavior and personal
responsibility of youth, as determined under Section 654(c) of the
Treasury and General Government Appropriations Act of 1999. HHS invites
additional comments on the impact of this proposed rule from affected
stakeholders.
Paperwork Reduction Act
The Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)) requires
that OMB approve all collections of information by a Federal agency
from the public before they can be implemented. This proposed rule is
projected to have no impact on current reporting and recordkeeping
burden for manufacturers under the 340B Program. Changes proposed in
this rule would result in no new reporting burdens. Comments are
welcome on the accuracy of this statement.
List of Subjects in 42 CFR Part 10
Biologics, Business and industry, Diseases, Drugs, Health, Health
care, Health facilities, Hospitals.
Dated: October 26, 2018.
George Sigounas,
Administrator, Health Resources and Services Administration.
Approved: October 30, 2018.
Alex M. Azar II,
Secretary, Department of Health and Human Services.
[FR Doc. 2018-24057 Filed 10-31-18; 11:15 am]
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