[Federal Register Volume 85, Number 247 (Wednesday, December 23, 2020)]
[Rules and Regulations]
[Pages 83822-83830]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-28483]



[[Page 83822]]

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

42 CFR Part 51c

RIN 0906-AB25


Implementation of Executive Order on Access to Affordable Life-
Saving Medications

AGENCY: Health Resources and Services Administration (HRSA), Department 
of Health and Human Services (HHS).

ACTION: Final rule.

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SUMMARY: This final rule implements an Executive Order requiring 
entities funded under section 330(e) of the Public Health Service Act 
(PHS Act or the Act), whether by receiving a federal award or a 
subaward, and that also participate in the 340B Drug Pricing Program 
(340B Program) must establish practices to provide access to insulin 
and injectable epinephrine to low-income health center patients at the 
price the health center purchased these two drugs through the 340B 
Program. The Executive Order supports the improved access to these 
life-saving medications by low-income individuals who do not have 
access to affordable insulin and injectable epinephrine due to either 
lack of insurance or high cost sharing requirements.

DATES: This final rule is effective on January 22, 2021.

FOR FURTHER INFORMATION CONTACT: Jennifer Joseph, Director, Office of 
Policy and Program Development, Bureau of Primary Health Care, Health 
Resources and Services Administration, 5600 Fishers Lane, Rockville, 
Maryland 20857; email: [email protected]; telephone: 301-594-4300; fax: 
301-594-4997.

SUPPLEMENTARY INFORMATION:

I. Public Participation

    On September 28, 2020, HHS published a notice of proposed 
rulemaking (NPRM) in the Federal Register (85 FR 60748) to implement 
Executive Order 13937 (Executive Order) of July 24, 2020, by amending 
the regulations implementing Section 330 of the Public Health Service 
Act (PHS Act or the Act), to require entities funded under Section 
330(e) of the Act to establish practices to provide insulin and 
injectable epinephrine to low-income patients at the price the health 
center purchased these two drugs through the 340B Program. The NPRM 
provided for a 30-day comment period, and HHS received 226 comments. 
HHS carefully considered all comments in developing this rule, as 
outlined in Section V below, and presents a summary of all significant 
comments and HHS responses.

II. Background

    As discussed in the NPRM, on March 13, 2020, President Trump 
declared the COVID-19 pandemic of sufficient severity and magnitude to 
warrant an emergency declaration for all states, territories, and the 
District of Columbia. With the COVID-19 emergency, many low-income 
individuals are experiencing significant economic hardship. These low-
income individuals who are dependent upon the life-saving medications 
of insulin and/or injectable epinephrine are now less able to access 
these drugs at an affordable price. On July 24, 2020, President Trump 
issued Executive Order 13937 to direct health centers that receive 
grants under section 330(e) of the PHS Act to support the improved 
access to certain life-saving medications by low-income individuals. As 
provided in the Executive Order, it is the policy of the United States 
to enable Americans without access to affordable insulin and injectable 
epinephrine through commercial insurance or federal programs, such as 
Medicare and Medicaid, to purchase these pharmaceuticals from a health 
center at the same price at which the health center acquired the 
medication through the 340B Program. This final rule aligns with the 
goals of the President's mandate.
    Through the Executive Order, the President directed the Secretary 
of Health and Human Services (the Secretary) to take action, to the 
extent permitted by law, to ensure all future grants available under 
section 330(e) of the PHS Act, as amended, 42 U.S.C. 254b(e), are 
conditioned upon health centers having established practices to make 
insulin and injectable epinephrine available at the discounted price 
paid by the health center grantee or subgrantee under the 340B Program 
(plus a minimal administration fee) to individuals with low incomes, as 
determined by the Secretary, who:
    (a) Have a high cost sharing requirement for either insulin or 
injectable epinephrine;
    (b) Have a high unmet deductible; or
    (c) Have no health care insurance.
    Under section 330(k)(3) of the Act, the Secretary may not approve 
an application for a grant under subparagraph (A) or (B) of subsection 
(e)(1) unless the Secretary determines that the entity for which the 
application is submitted meets the requirements enumerated in section 
330(k)(3)(A)-(N). Section 330(k)(3)(N) requires that ``the center has 
written policies and procedures in place to ensure the appropriate use 
of Federal funds in compliance with applicable Federal statutes, 
regulations, and the terms and conditions of the Federal award.'' 
Through this final rule, and consistent with the Act, HRSA will include 
in the Terms section of applicable Notices of Award (NOAs) issued under 
section 330(e) grant awards, the requirement that health center 
awardees comply with the discounted price provisions described herein.
    This regulation applies to new grants and new project periods for 
service area, new access point, supplemental, and expanded services 
awards issued under section 330(e) of the PHS Act.

III. Statutory Authority

    The statement of authority for 42 CFR part 51c continues to read 
section 330 of the PHS Act (42 U.S.C. 254b) and section 215 of the PHS 
Act (42 U.S.C. 216).

IV. Summary of This Rule

Overview

    This rule codifies the proposed requirement described in the 
September 2020 NPRM implementing the Executive Order issued to support 
the improved access to certain life-saving medications for low-income 
individuals. This rule establishes a requirement for awarding new 
grants under section 330(e) of the PHS Act (42 U.S.C. 254b) that the 
awardee have established written practices to make insulin and 
injectable epinephrine available at or below the discounted price paid 
by the health center grantee or subgrantee under the 340B Program (plus 
a minimal administration fee) to health center patients with low 
incomes who: (a) Have a high cost sharing requirement for either 
insulin or injectable epinephrine, (b) have a high unmet deductible, or 
(c) have no health insurance. This final rule also provides definitions 
relevant to this requirement.
    Through this final rule, the requirement for all grant awards under 
section 330(e) of the PHS Act is as follows:
    Under Executive Order 13937, issued July 24, 2020, if your health 
center or a subrecipient receives section 330(e) funding, is enrolled 
in the 340B Program and purchases, is reimbursed, or provides 
reimbursement to other entities for insulin and injectable epinephrine, 
whether obtained using federal or non-federal funds, your health center 
must have established practices to make insulin and injectable 
epinephrine available to low-income health center patients (defined 
herein as

[[Page 83823]]

those individuals or families with annual incomes at or below 350 
percent of the Federal Poverty Guidelines (FPG))--who either have 
insurance with a high cost sharing requirement for either insulin or 
injectable epinephrine, as applicable, a high unmet deductible, or who 
have no health insurance--at or below the price the health center paid 
through the 340B Program, plus a minimal administration fee. You are 
not required to charge third-party payors this discounted price.
    Consistent with the Executive Order, this Term only applies to 
health centers receiving section 330(e) grant funds that participate in 
the 340B Program (42 U.S.C. 254b and 256b). This requirement is limited 
to increasing affordable access to insulin and injectable epinephrine. 
The requirement to make insulin and injectable epinephrine available at 
or below the same price paid through the 340B Program does not apply to 
other 340B drugs. Health centers subject to this requirement are 
expected to provide drugs in these two categories at or below the price 
paid through the 340B Program to health center patients only, and only 
to those health center patients identified as low-income, as described 
below. An individual will not be considered a ``patient'' of the health 
center for this purpose if the only health care service received by the 
individual from the health center is the dispensing of a drug or drugs 
for subsequent self-administration or administration in the home 
setting. See Notice Regarding Section 602 of the Veterans Health Care 
Act of 1992 Patient and Entity Eligibility, 61 FR 55,156 (Oct. 24, 
1996). Nothing in this Program Term or the actions described in this 
final rule prohibits or otherwise restricts a health center from 
setting the price for insulin or injectable epinephrine lower than the 
price the health center paid through the 340B Program.
    This Program Term will be included on all Notices of Award issued 
to health centers receiving grant funds under section 330(e) of the 
Act.
    The Executive Order states that future grants under section 330(e) 
should be conditioned upon health centers or subrecipients 
participating in the 340B Program, including through contract pharmacy 
arrangements, having established practices to make insulin and 
injectable epinephrine accessible at an affordable price to low-income 
patients. To implement this requirement, all future awards made 
available under section 330(e) will include the requirement that health 
centers participating in the 340B Program comply with the regulation as 
described in the Program Term in order to receive a grant award. 
Specifically, these funding opportunities will require health centers 
that participate in the 340B Program to have established practices that 
implement the Executive Order by offering insulin and injectable 
epinephrine to low-income health center patients at no more than the 
price the health center paid through the 340B Program plus a minimal 
administration fee. In particular, these practices will provide 
information to health center patients in an easily understandable 
format regarding their administration fees, and the low-income, high 
cost sharing, and high unmet deductibles standard as described in this 
regulation. Health centers that have one or more subgrantees that 
participate in the 340B Program must demonstrate such subgrantees have 
established practices to offer health center patients these 340B 
discounted drugs as described in this final rule.
    Through this final rule, HRSA defines the following terms to assist 
health centers in complying with and implementing the Executive Order.
    1. ``Established practices'': The health center demonstrates 
through its written policies, procedures, and/or other relevant 
documents that it has established practices to offer insulin and 
injectable epinephrine at no more than the discounted price paid by the 
health center under the 340B Program plus a minimal administration fee.
    2. ``Health center grantee or subgrantee'': The Executive Order 
cites section 1905(l)(2)(B)(i) and (ii) of the Social Security Act, as 
amended (42 U.S.C. 1396d(l)(2)(B)(i) and (ii)). These two subparagraphs 
refer to organizations receiving an award under section 330 of the PHS 
Act (health centers) directly or as a subrecipient of grant funding. 
For purposes of this final rule, this definition of health center 
grantee or subgrantee is defined as organizations receiving funding 
under section 330(e) of the PHS Act.
    3. ``Minimal administration fee'': This final rule establishes that 
health centers receiving funding under section 330(e) of the PHS Act 
are expected to offer insulin and injectable epinephrine at or below 
the price the health center paid through the 340B Program, plus a 
minimal administration fee. As the Executive Order does not allow any 
other charge for these two categories of drugs, the minimal 
administration fee is expected to include any dispensing fee, 
counseling costs, and any other charges associated with the patient 
receiving the medication. As the fee must be ``minimal,'' consistent 
with the stated policy of the Executive Order, the administration fee 
should not create a barrier to low-income health center patients 
accessing these drugs, and health centers should make every reasonable 
effort to keep the fee as low as possible. Health centers may consider 
referring to the Medicaid dispensing fee in their state \1\ as a 
comparison for what may be considered a minimal administration fee. 
Please note that when there is a separate fee associated with provision 
of the pharmaceutical service, such as a dispensing fee, health centers 
must apply a sliding fee discount to that fee. The Health Center 
Program Compliance Manual's Sliding Fee Discount Program Chapter 
specifies the requirements of a health center's sliding fee discount 
program for in-scope services including pharmaceutical services.\2\
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    \1\ Please see https://www.medicaid.gov/medicaid/prescription-drugs/state-prescription-drug-resources/medicaid-covered-outpatient-prescription-drug-reimbursement-information-state/index.html for 
further information.
    \2\ Please see https://bphc.hrsa.gov/programrequirements/compliancemanual/chapter-9.html#titletop for further information.
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    4. ``Individuals with low incomes'': This final rule defines 
individuals with low incomes as individuals and families with annual 
incomes of no greater than 350 percent of the Federal Poverty 
Guidelines.
    5. ``High cost sharing requirement'': For purposes of this final 
rule, cost sharing refers to a patient's out-of-pocket costs, 
including, but not limited to, deductibles, coinsurance, and 
copayments, or similar charges. More specifically, a cost sharing 
requirement that exceeds twenty percent of the amount the health center 
is charging its patients for the drug would be considered a high cost 
sharing requirement.
    6. ``High deductible'': High deductible refers to a deductible 
amount that is not less than the amount required for a high deductible 
health plan as defined in section 223(c)(2)(A) of the Internal Revenue 
Code, which, for 2020, is any plan with a deductible of at least $1,400 
for an individual or $2,800 for a family, with out-of-pocket costs not 
to exceed $6,900 for an individual and $13,800 for a family for in-
network services. For 2021, the deductible limits would remain the 
same, while the limits for out-of-pocket costs would increase to $7,000 
for self-only coverage and $14,000 for family coverage. When the 
Internal Revenue Service (IRS) updates these figures, HRSA will post 
the updated high deductible amounts on the Health Center Program 
website.
    7. ``High unmet deductible'': High unmet deductible refers to the 
amount

[[Page 83824]]

a patient owes toward their high deductible at any time during a plan 
year in which the portion of the patient's high deductible for the plan 
year that has not yet been met exceeds 20 percent of the deductible.
    8. ``Health insurance'': Health insurance refers to private 
insurance, State and exchange plans, employer-funded plans, and 
coverage under titles XVIII, XIX, and XXI of the Social Security Act.

V. Public Comments and Responses

    HRSA received a total of 226 comments from the public, including 
individuals requiring insulin or injectable epinephrine and their 
family members, associations and organizations representing health 
centers and other stakeholders, health center staff and clinical 
professionals, health insurance issuers, and pharmaceutical 
manufacturers. The vast majority of commenters identifying themselves 
as individuals or the family members of those who rely on insulin or 
injectable epinephrine (22) were in favor of the proposed rule, 
although several suggested the proposed rule did not go far enough in 
reducing prices of these two medications. Many commenters (175), 
including many health centers, strongly urged that the proposed rule 
either not be finalized or be delayed in implementation, although most 
of these comments shared in the Administration's goal of ensuring 
access to these two life-saving medications. Most of the comments 
opposing implementation of the rule or suggesting delaying 
implementation also recommended changes to the language of the NPRM if 
it were to be implemented.
    All comments were considered in developing this final rule. This 
section presents a summary of all major issues raised by commenters, 
grouped by subject, as well as responses to the comments. Commenters 
used the terms ``Federally Qualified Health Centers (FQHCs)'' and 
``health centers'' interchangeably. For consistency, and as this rule 
applies to health centers funded under Section 330(e) of the PHS Act, 
and not to other FQHCs, this final rule uses ``health center'' 
throughout.

1. Support for the Proposed Rule

    Approximately 23 commenters expressed support for the proposed 
rule. Commenters cited a number of reasons for their support, including 
the high cost of insulin and injectable epinephrine and concern over 
increasing costs of medications. Commenters also stated that lower cost 
medications lead to higher medication patient adherence and, as such, 
lower the costs to the overall health system. One commenter noted that 
the proposed rule would mostly benefit those between 200 percent and 
350 percent of the FPG.\3\ Many of these commenters felt the proposed 
rule should be expanded to include more medications and patients beyond 
those served by health centers.
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    \3\ The FPG are a federal poverty measure issued each year in 
the Federal Register by HHS. The guidelines are used for 
administrative purposes, such as for determining financial 
eligibility for certain federal programs. They are available at 
https://aspe.hhs.gov/poverty-guidelines.
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    Additionally, one commenter requested that HRSA include the 
proposed rule's requirements in all grants establishing 340B 
eligibility, and that the proposed rule's requirements should also 
apply to health centers' contract pharmacy arrangements.
    Response: HRSA appreciates the commenters' support for the rule. 
Consistent with the direction provided to HHS in the Executive Order, 
HRSA is not expanding this final rule beyond health centers receiving 
grants under Section 330(e) of the PHS Act, to drugs beyond insulin and 
injectable epinephrine, or otherwise beyond the parameters identified 
in the proposed rule. As a clarification, health centers utilizing 
contract pharmacy arrangements must also adhere to this final rule.

2. Concerns Regarding the Proposed Rule's Enforceability

    Two commenters expressed concerns with the proposed rule's 
enforceability. Commenters suggested that a rule implementing the 
Executive Order could be easily circumvented and could be challenging 
to enforce. More specifically, commenters stated that without explicit 
codes for documenting which health centers participate in the 340B 
Program, it would be difficult to monitor and enforce compliance. 
Another commenter suggested HRSA clearly identify which health centers 
are participating in the 340B Program to help private sector partners 
support the implementation of the proposed rule. In addition, the 
commenter stated that HRSA should specify methods that would be used to 
verify income and insurance status in order to successfully operate the 
program.
    One commenter also included suggestions for ensuring compliance and 
eliminating loopholes, including: (1) Providing receipt information for 
the monetary exchange between patients and providers, (2) comparing the 
manufacturer's drug price against the price charged to patients, and 
(3) using incentives to ensure compliance beyond the loss of section 
330(e) funding awards (e.g., loss of medical license for non-
compliance).
    Response: HRSA appreciates these comments. HRSA provides oversight 
of all covered entities in the 340B Program, including health centers, 
and HRSA declines to add these suggested compliance requirements. In 
particular, the suggestion that non-compliance should result in the 
loss of a medical license is outside of HRSA's purview.
    With regard to the other suggestions for monitoring compliance with 
the final rule, HRSA will monitor the ongoing implementation of this 
final rule and will make changes as appropriate to ensure its effective 
implementation.

3. Final Rule Is Not Needed as the 340B Program Is Operating as 
Intended

    Approximately 52 commenters stated that the 340B Program is 
operating as intended when originally created and changes are not 
needed. Many of these commenters stated that health centers already 
provide discounted drugs to patients, regardless of their ability to 
pay. Commenters also noted that health centers are required by law to 
use 340B savings to expand access to health care for the underserved, 
and these savings are crucial to enabling health centers to offer other 
services to their patients in addition to providing discounts for 
drugs.
    One commenter called on HRSA to take a more holistic approach to 
realign the 340B Program with its original intent and scope and support 
health centers' access to the 340 Program.
    Response: HRSA acknowledges that health centers use 340B Program 
savings to benefit their patient population, as required by the Health 
Center Program, and many health centers provide discounted medications 
to their patients. Consistent with the Executive Order, this final rule 
applies only to insulin and injectable epinephrine and does not address 
other drugs health centers purchase through the 340B Program.

4. The Executive Order Reflects a Misunderstanding of Health Centers' 
Mission and Operations

    Approximately 175 commenters suggested that the Executive Order, on 
which the NPRM is based, reflects fundamental misunderstandings about 
health centers' mission and operations, and does not recognize the 
essential role that health centers play in ensuring access to 
affordable pharmaceuticals for medically vulnerable populations. The 
commenters expressed concern with the

[[Page 83825]]

Executive Order provision that suggested that health centers are 
benefiting inappropriately from the 340B Program at the expense of 
their vulnerable patients. The commenters argued that health centers do 
much more than pass on the 340B discount to their low-income patients, 
and often discount drug prices below the 340B price to ensure they are 
affordable. Additionally, commenters stated that all health centers are 
required to invest all 340B savings into activities that expand access 
to care for low-income populations, and that health centers are already 
part of the solution to unaffordable drug prices, and not part of the 
problem. Commenters also stated that health centers are widely praised 
for their strong track record of compliance with both the letter and 
the spirit of the 340B statute.
    Response: The final rule implements the goals and intent of the 
Executive Order to make insulin and injectable epinephrine more 
affordable. HRSA acknowledges that health centers play a crucial role 
in providing access to comprehensive, high quality primary health care 
to all patients regardless of ability to pay. Further, HRSA is 
cognizant of health centers' compliance with the 340B statute and 
strong track record of using the savings generated to benefit patients. 
HRSA values its partnerships with all health centers and commends their 
efforts to ensure access to affordable drugs for all of their patients.

5. The Executive Order Reflects a Misunderstanding of the 340B Program

    Approximately 161 commenters suggested that the Executive Order on 
which the NPRM is based reflects a fundamental misunderstanding of the 
340B Program, and if implemented as written would decrease some 
patients' access to affordable drugs. The commenters argued that this 
misunderstanding of 340B pricing would result in some patients paying 
more for insulin, dramatic fluctuations in insulin costs from one 
quarter to another and requiring quarterly changes to a patient's 
prescription to keep them on the most affordable insulin brand 
available.
    The commenters also disagreed with the Executive Order's statement 
that health centers pay only one penny for a month's supply of insulin 
or injectable epinephrine. The commenters suggested that this statement 
was not universally true given drug pricing fluctuations, with prices 
for drugs often varying from one penny in one quarter to over $100 in 
another quarter. These commenters stated that health centers cannot 
guarantee that the price of the insulin or injectable epinephrine that 
a patient will pay on a certain day is the exact 340B price. This 340B 
price fluctuation from quarter to quarter can create an undue 
administrative compliance burden on health center staff.
    One commenter suggested that the drug price charged to the health 
center patient should be the average 340B drug price to account for the 
quarterly variations in pricing.
    Response: The rule implements the goals and intent of the Executive 
Order to make insulin and injectable epinephrine more affordable. HRSA 
recognizes that health centers have a strong history of compliance with 
the 340B statute and that many already significantly discount drugs for 
their patients, either through in-house pharmacies or via 340B contract 
pharmacies.
    Drug prices are set quarterly based on prices manufacturers submit 
to the Centers for Medicare & Medicaid Services. Although insulin and 
injectable epinephrine prices may vary from quarter to quarter, the 
final rule allows health centers to offer these drugs at lower than the 
340B price despite these fluctuations. Given this flexibility, and 
consistent with the intent of the Executive Order, HRSA will not change 
the final rule to allow for the averaging of 340B prices.

6. Differences Between the Executive Order and NPRM

    Approximately 143 commenters noted that the language in the 
proposed rule departs from language in the Executive Order. 
Specifically, the proposed rule would allow health centers to make 
insulin and injectable epinephrine available ``at or below'' the price 
the health center paid through the 340B Program, whereas the Executive 
Order requires that health centers make such medications available ``at 
the discounted price.'' Commenters suggested that the Executive Order 
prohibits health centers from providing these drugs at prices below the 
340B Ceiling Price. The commenters agreed with the need to allow 
flexibility in providing further discounts to patients but expressed 
concern that the discrepancy in language between the Executive Order 
and proposed rule demonstrates the inappropriateness of both.
    Response: HRSA intends to proceed with language in the proposed 
rule requiring health centers to make insulin and injectable 
epinephrine available ``at or below'' the price paid by the health 
center through the 340B Program. This final rule will allow a health 
center to provide either of these two medications to patients at a 
price below the 340B Price. The language in this rule is consistent 
with the intent of the Executive Order.

7. Change Proposed Definition of ``Low-Income''

    Approximately 164 commenters requested that HRSA change its 
proposed definition of ``low-income'' from 350 percent of the FPG to 
200 percent of the FPG to better align with definitions used by other 
federal programs and private entities. Commenters noted that income 
assessments are not typically conducted by clinical staff, and those 
who conduct the assessments do not and should not have access to the 
personal health information that would be required for them to conduct 
a separate income analysis for patients who require insulin or 
injectable epinephrine. Additionally, commenters stated that such staff 
may not be competent to determine which patients may need such drugs 
now or in the future. Commenters specifically argued that using a low-
income definition different from the 200 percent of the FPG required by 
the Health Center Program would create significant burden on health 
center staff to determine eligibility for health center discounts 
differently from eligibility for the pricing created by the proposed 
rule. This discrepancy would also create potential burden when using a 
contract pharmacy, where staff may be unfamiliar with evaluating 
patient income and may be unwilling to do so. Commenters further noted 
HHS, the United States Census Bureau, and private groups use 200 
percent of the FPG to define low-income for research purposes. 
Commenters stated that for every federal program with income 
eligibility thresholds, low-income is defined as 250 percent of the FPG 
or less. While the Patient Protection and Affordable Care Act uses a 
ceiling above 350 percent to identify those eligible for premium tax 
credits on the Exchanges, this is not a definition of low income, as 
premium tax credits are designed for both lower and middle class 
individuals. Finally, commenters argued that a 350 percent FPG 
threshold could eliminate health centers' ability to retain 340B 
savings from privately insured patients due to health insurance issuers 
frequently requiring health centers to bill no more than their usual 
and customary (U&C) rate. While health centers have been successful 
resisting issuers' attempts to define U&C rates as discounted rates 
provided to patients at or below 200 percent FPG, the commenters 
expressed concern that

[[Page 83826]]

defining low-income as 350 percent FPG will cover most health center 
patients, making it very difficult to argue that the 340B price for 
insulin and injectable epinephrine is not the health center's U&C rate. 
This change would effectively transfer the 340B benefit from health 
centers to private health insurance issuers.
    Response: HRSA intends to proceed with the language in the proposed 
rule requiring health centers to make insulin and injectable 
epinephrine available at or below the price paid by the health center 
through the 340B Program to health center patients that have incomes at 
or below 350 percent FPG and that otherwise meet the criteria described 
in this rule. While HRSA appreciates the feedback on the definition of 
``low income'', we do not agree that it is too burdensome to implement 
as written. The language in this rule is consistent with the intent of 
the Executive Order.

8. Clarify Eligible Patients Under the Rule

    Approximately 162 commenters requested clarification of the 
regulatory language that only those patients who meet the 340B patient 
definition are eligible for the 340B (or lower) price. Commenters 
argued that the regulatory language must clearly state that the health 
center is required to charge the 340B price (or less) only to those 
low-income individuals who meet the definition of ``FQHC patient'' 
under the 340B Program. Without such language, health centers could be 
forced to provide 340B pricing (or less) to individuals who are not 
eligible to receive 340B-priced drugs from the health center. 
Commenters used the example that low-income individuals could demand 
the health center provide them with discounted insulin, without 
permitting the health center to assume responsibility for their care (a 
necessary step for 340B eligibility). In such situations, 340B 
compliance would require the health center to purchase the insulin at 
the regular price, while this regulation would require that the 
individual be charged the 340B price or lower--an outcome that would be 
both expensive and administratively burdensome for the health center. 
Commenters recommended an addition to the regulatory text to clarify 
that only eligible health center patients should be able to access 
these drugs at the 340B price.
    Response: The intent of the rule is to provide insulin and 
injectable epinephrine at no more than the 340B price to health center 
patients and not to individuals who are not health center patients. 
HRSA understands commenters' concerns, and the language in 42 CFR 
51c.303(w)(1) has been revised to clarify that the final rule applies 
only to ``health center patients.'' HRSA also notes that the NPRM 
states that a ``patient'' for purposes of this subsection means only 
health center patients who receive in-scope health center services 
beyond dispensing of drugs that are self-administered or administered 
at home. This definition is also being finalized in this rule.

9. Address Potential Conflict With Third-Party Payor Contract Terms

    Approximately 161 commenters requested that HRSA add regulatory 
language ensuring that health centers are not forced to provide 
discounts to underinsured patients if doing so would violate the terms 
of their insurance contracts. These commenters noted that many health 
insurance issuers prohibit providers from charging patients less for a 
service or supply than the amount due under their deductible or cost 
sharing requirements.
    Response: HRSA acknowledges that health centers need to comply with 
the terms of their contracts with third-party payors. HRSA clarifies in 
the final rule that provision of insulin and injectable epinephrine at 
or below the 340B discounted price is subject to potential restrictions 
in contracts with third-party payors. The language of the final rule 
reflects this clarification.

10. Change Definitions of ``High Cost Sharing Requirement,'' ``High 
Deductible'' and ``High Unmet Deductible''

    Approximately 161 commenters requested HRSA clarify its definitions 
of ``high cost sharing requirement.'' Commenters specifically noted 
confusion surrounding the definition of ``high cost sharing 
requirement'' and asked whether it means that a low-income patient 
should be charged the lesser of their cost sharing amount, or the 
amount they would be charged under the proposed rule if they were 
uninsured. In addition, two commenters argued that health centers 
already provide their patients with medications at significant 
discounts and are thus concerned about defining ``high cost sharing 
requirement'' as 20 percent of an already discounted price. The two 
commenters noted that it is unlikely that a private health insurance 
issuer would define a charge that is 20 percent of an already 
discounted price as a ``high cost sharing requirement.'' Commenters 
requested the definition be rewritten to reflect that 20 percent of an 
already discounted price is not a high cost sharing requirement. One 
commenter requested clarification as to how ``high cost sharing'' would 
be calculated for a patient with an insurance plan that ties the 
patient's cost sharing to a deductible or co-insurance that may change 
over the course of a plan year and suggested that this kind of 
fluctuation in cost sharing would require communication with payors and 
should be worked out before a final rule is promulgated.
    Two commenters requested that ``high deductible'' and ``high unmet 
deductible'' be changed to a specifically defined amount so that health 
center and contract pharmacy staff could determine eligibility from a 
patient's insurance card. They specifically noted the proposed 
definition of ``high deductible'' points to a section in the Internal 
Revenue Code and that it would be burdensome for intake staff to 
determine if a patient has a ``high deductible'' or a ``high unmet 
deductible'' using this definition. One commenter requested further 
clarification of ``high unmet deductible,'' asking if once a patient 
meets 80 percent of their deductible they are no longer eligible for 
the proposed rules' pricing. The commenter noted that, if so, the 
patient's deductible payments would need to be tracked throughout the 
plan year and made available at the point of sale through the claims 
adjudication process. Additionally, medical claims may need to be 
factored into the unmet deductible amount, which could be challenging 
due to the delays in processing medical claims for patients with a dual 
pharmacy/medical deductible.
    Response: HRSA appreciates the feedback surrounding the definition 
of ``high cost sharing requirement.'' The rule does not state that a 
low-income patient should be charged the lesser of their cost sharing 
amount or the amount they would be charged under the proposed rule if 
they were uninsured. Rather, the rule states that such patients should 
be provided access to insulin and injectable epinephrine at no more 
than the price at which the health center purchased the drug through 
the 340B program. While HRSA appreciates the feedback on the definition 
of ``high cost sharing requirement,'' we do not agree that it is too 
burdensome to implement as written. HRSA also notes that health centers 
may choose to charge their patients less than the discounted price at 
which the health center purchased the drug through the 340B Program, 
regardless of the patient's insurance out-of-pocket costs or insurance 
status.
    HRSA appreciates the feedback that the proposed rule may be 
difficult to implement for patients whose cost

[[Page 83827]]

sharing changes throughout the plan year. HRSA will monitor 
implementation of the final rule and will modify it if we determine 
that a modification is warranted.
    HRSA appreciates the feedback that it will be difficult for health 
center intake staff to determine eligibility for the final rule's 
pricing on insulin and injectable epinephrine because the rule's 
definition of ``high deductible'' references the Internal Revenue Code 
definition. As reflected in the preamble of the NPRM, HRSA will publish 
the Internal Revenue Code definition of high deductible on the Health 
Center Program website. Such eligibility determinations may be 
integrated into existing processes utilized by health centers. 
Furthermore, it is HRSA's understanding that many insurance cards do 
print the deductible on their cards, and we agree that the ability to 
evaluate whether a plan has a ``high deductible'' based on such 
information may make evaluation less burdensome on health center staff. 
However, HRSA does not have the authority to require health insurance 
issuers to place deductible amounts on the proof of insurance cards 
they provide to patients.
    HRSA appreciates the feedback on the definition of ``high unmet 
deductible'' and the potential difficulty with implementing this 
provision of the rule. To clarify, HRSA does intend that once a patient 
meets 80 percent of a high unmet deductible, the health center would no 
longer be required to provide that patient with insulin or injectable 
epinephrine at the 340B price as described by this rule, unless such 
patient separately meets the definition of either having a ``high cost 
sharing requirement'' or having no insurance. We realize this may have 
the potential to create additional burden on health centers and their 
contract pharmacies to ascertain a patient's eligibility for pricing 
under this rule. HRSA will monitor implementation of this final rule 
and will modify it if it is deemed that a modification is warranted.

11. Clarify Definition of ``Minimal Administration Fee''

    Approximately 161 commenters requested clarification that, as a 
result of this rule, the ``minimal administration fee'' for insulin and 
injectable epinephrine will differ from the fees (if any) associated 
with dispensing other pharmaceuticals. Commenters noted that this rule 
will create significant additional administrative burdens for health 
centers, beyond the costs regularly associated with dispensing, 
counseling, and 340B compliance. One commenter requested that if the 
eligibility threshold under this rule is not aligned with the 200 
percent of the FPG established for discounts to health center services 
under the Health Center Program, that HRSA define ``minimal 
administration fee'' to include costs associated with dispensing, 340B 
compliance, and the additional administrative work required to identify 
patients. Furthermore, they requested that HRSA clarify that this fee 
is unique to the dispensing of insulin and injectable epinephrine.
    One commenter requested clarification that administration fees may 
include limited per prescription fees associated with operationalizing 
an overall 340B Program or contract pharmacy network. Because health 
centers often have arrangements with third-party vendors and/or 
contract pharmacies that include a per prescription fee, and such fees 
are often minimal, changes to how these fees are calculated and 
administered could cause patients to lose access to some pharmacies.
    Response: The final rule defines ``minimal administration fee'' as 
a fee that may not create a barrier to low-income patients' access to 
insulin and injectable epinephrine. It would be inconsistent with the 
intent of the Executive Order and the rule to define ``minimal 
administration fee'' in a way that could create a barrier to accessing 
these drugs. A definition that included potential costs related to 
compliance could be seen as accepting that health centers will charge 
patients a higher fee to purchase insulin and injectable epinephrine 
than for other pharmaceuticals.
    As all health centers are required to collect information regarding 
patient income, HRSA does not anticipate the need for a separate 
eligibility review. Entities participating in the 340B Program already 
manage different prices for 340B drugs on a quarterly basis. This final 
rule has clarified that only health center patients are eligible for 
insulin and injectable epinephrine at the prices set under this rule, 
and HRSA does not anticipate health centers incurring additional costs 
related to non-health center patients receiving these drugs. Monitoring 
and reporting compliance with this rule is not anticipated to be 
significant.
    HRSA recognizes that the minimal administration fee described in 
the rule does not occur with other pharmaceuticals, including other 
340B drugs, where multiple fees are listed separately. The rule defines 
the term, and states that health centers may, but are not required to, 
charge such a minimal administration fee for insulin and injectable 
epinephrine. HRSA acknowledges that this minimal administration fee is 
unique to this rule and insulin and injectable epinephrine as covered 
here, and that this rule does not create a new term that applies to the 
340B Program beyond this rule. As noted in the rule, all definitions 
are provided ``for purposes of this paragraph exclusively.'' Therefore, 
HRSA declines to make revisions to this section.

12. Clarify ``Established Practices''

    One commenter requested that HRSA clarify and provide additional 
guidance on the proposed rule's requirement for ``established 
practices.'' Because not all covered entities have mechanisms in place 
to adjudicate 340B claims for uninsured or underinsured patients, the 
commenter noted that many will have to take affirmative steps to 
develop systems and processes to support the provisions of the proposed 
rule, which have cost and time implications. These additional 
administrative costs could lead to reduced patient access to health 
center services or discounted drugs.
    The commenter requested HRSA clarify that to the extent that 340B 
covered entities have existing contracts with third-party 
administrators or vendors regarding established practices, deference be 
given to the practices in those existing contracts. However, for those 
covered entities that do not have established practices in place, the 
commenter requested that HRSA provide clear guidance on how covered 
entities should notify contract pharmacies so that they are aware which 
patients are eligible for the discounted prices.
    Response: HRSA proposed a definition of ``established practices'' 
in the NPRM and finalizes that definition in this rule. We understand 
that some health centers will have to establish new practices to ensure 
compliance with the requirements of this rule; however, HRSA does not 
anticipate that the administrative costs of establishing such practices 
will be substantial.

13. Suggested Technical Edits to (w)(1)

    One commenter suggested several edits to the NPRM language proposed 
at 42 CFR 51c.303(w)(1). Specifically, they suggested that the 
regulatory language in subsection 51c.303(w)(1), as proposed in the 
NPRM, be edited to replace ``through a written agreement'' with 
``indirectly.'' They argued that some 340B covered entities either do 
not have written agreements with contract pharmacies, or do not abide 
by such agreements. They further suggested

[[Page 83828]]

that ``discounted price paid by the health center'' be replaced with 
``340B Ceiling Price,'' arguing that ``ceiling price'' be more clearly 
defined. They also suggested several typographical edits.
    Response: As the commenter noted, health centers should have 
written agreements with contract pharmacies used for dispensing 340B 
drugs. HRSA believes that the use of ``written agreements'' as proposed 
in the NPRM will provide greater clarity for health centers in 
complying with this rule. It is HRSA's intent that a health center 
choosing to participate in the 340B Program must provide the two life-
saving medications identified in this rule either directly or through a 
written agreement. Other forms of ``indirect'' distribution of the drug 
would not be compliant with the rule. HRSA will monitor implementation 
of this final rule and will modify it if it is deemed that a 
modification is warranted.
    HRSA will not at this time use ``340B Ceiling Price'' as suggested 
by the commenter. The Executive Order intended for low-income patients 
to access insulin and injectable epinephrine at no more than the price 
paid by the health center through the 340B Program. As it is possible 
that the health center may have paid less than the 340B Ceiling Price, 
the language proposed in the NPRM is finalized in this rule.
    HRSA appreciates the commenter's identification of several 
typographical edits and accepts those suggestions, which are reflected 
in the final rule.

14. Concern Regarding Market Distortions

    Two commenters expressed concern regarding market distortions. One 
commenter argued that the proposed rule could exacerbate market 
distortions, as well as create new ones. Another commenter noted that 
applying this policy to the insured could deflect costs from insurance 
plans to patients and that the policy could perpetuate a situation 
whereby patients with insurance may be unable to utilize the benefit in 
a meaningful way. The commenter argued that allowing patients with 
insurance to access 340B Program pricing creates a perverse incentive 
for insurance plans to continue shifting out-of-pocket costs for 340B 
drugs to patients. They argued that this undermines the purpose of 
insurance, and that to the extent more patients remain in the 
deductible phase of the benefit for all if not most of the year, the 
health insurance issuer does not provide any coverage for the patient's 
prescription.
    Response: HRSA appreciates the concern expressed in these comments. 
However, the purpose of the Executive Order and the rule is to reduce 
the cost of insulin and injectable epinephrine to patients. Therefore, 
HRSA will finalize the rule as described.

15. Concern Regarding Additional Burden on Contract Pharmacies

    One commenter noted the NPRM expressly states there will be no 
additional paperwork or reporting burden for health centers associated 
with implementation. The commenter was concerned that implementation of 
the proposed rule could lead to additional paperwork, reporting, and 
regulatory burdens for independent pharmacies operating as contract 
pharmacies for health centers. The commenter requested clarification in 
the final rule that no additional burdens will be placed on contract 
pharmacies.
    Response: Health centers and contract pharmacies operate as private 
entities and make independent decisions as to their contracting 
arrangements. HRSA will continue to monitor the impact of this final 
rule on health centers and their contract pharmacy arrangements and 
will modify it if it is determined that a modification is warranted.

16. Rule Is Economically Significant

    One commenter disagreed with the proposed rule and believed it was 
economically significant and that it would have an impact on small 
entities. The commenter requested that HRSA be required to further 
evaluate the costs and benefits of finalizing the proposed rule and to 
look at alternatives to implementing the rule.
    Response: This comment is addressed in the Regulatory Impact 
Analysis section of this final rule.

17. Legal Sufficiency of the NPRM

    One commenter argued that the NPRM does not provide legal 
justification and is therefore arbitrary and capricious and contrary to 
the Administrative Procedure Act. The commenter requested that HRSA 
withdraw the NPRM.
    Response: HRSA has indicated the statutory authority for the NPRM 
and final rule as Section 330 of the PHS Act (42 U.S.C. 254b) and 
Section 215 of the PHS Act (42 U.S.C. 216), and is issuing the final 
rule pursuant to Executive Order 13937. HRSA disagrees with the 
commenter that the rule is arbitrary and capricious. HRSA stated in the 
NPRM that the ongoing Coronavirus Disease COVID-19 pandemic has caused 
significant hardship among many low-income individuals and, because of 
this and consistent with the Executive Order, HRSA is attempting to 
ensure two life-saving medications, insulin and injectable epinephrine, 
are available at affordable rates. HRSA disagrees that the NPRM and 
final rule are inconsistent with the Administrative Procedure Act.

18. Miscellaneous

    Other commenters raised a variety of issues that do not pertain 
directly to the implementation of Executive Order 13937 requiring 
entities funded under Section 330(e) of the PHS Act to establish 
practices to provide access to insulin and injectable epinephrine to 
low-income health center patients at the price the health center 
purchased these two drugs through the 340B Program, which was the focus 
of the proposed rule. This final rule does not address those issues as 
they are outside the scope of the proposed rule.

VI. Regulatory Impact Analysis

    HHS has examined the effects of this 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 (Pub. L. 96-354, 
September 19, 1980), the Unfunded Mandates Reform Act of 1995 (Pub. L. 
104-4), and Executive Order 13132 on Federalism (August 4, 1999). HHS 
has also considered Executive Order 13771 (``Reducing Regulation and 
Controlling Regulatory Costs''), and received public comments 
describing new administrative costs for health centers. As a result, 
OMB has determined this rule is regulatory for purposes of Executive 
Order 13771.

Executive Orders 12866 and 13563

    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

[[Page 83829]]

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 this rule will have an economic impact of 
$100 million or more in any 1 year, or adversely and materially affect 
a sector of the economy, productivity, competition, jobs, the 
environment, public health or safety, or State, local, or Tribal 
governments or communities. Because this rule is limited in scope to 
two classes of drugs that are of particular need and it aligns with the 
mission for health centers to provide access to care for vulnerable 
individuals and families, HHS believes it will have minimal economic 
impact. The economic impact is also expected to be minimal given the 
rule is limited to only two drug categories which are available under 
the 340B Program at significantly reduced prices. Indeed, approximately 
91 percent of patients at affected health centers have incomes at or 
below 200 percent of FPG, and thus receive discounts on health 
services. (In addition, health centers are required to reinvest any 
income from the 340B Program into patient services.) Many commenters 
noted that health centers already provide medications at reduced prices 
to their patients. For example, some health centers reported charging 
$7 for a 1-month supply of insulin for individuals below 200 percent of 
poverty. As discussed earlier, in the summary of public comments, the 
final rule leads to new administrative costs for health centers in 
association with new processes and procedures. There are approximately 
1,385 health center awardees that could experience these new costs.\4\ 
HRSA estimates that, on average, each health center would need one 
additional full-time equivalent (FTE) eligibility assistance worker at 
approximately $50,000 to support necessary additional administrative 
processes, totaling approximately roughly $68,750,000. Therefore, OMB 
has not designated this rule as ``economically significant'' under 
section 3(f)(1) of the Executive Order 12866. HHS welcomed but received 
no public comments that demonstrated this rule will have an economic 
impact exceeding the threshold set by E.O. 12866.
---------------------------------------------------------------------------

    \4\ See https://data.hrsa.gov/tools/data-reporting/program-data/national.
---------------------------------------------------------------------------

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 3 percent impact on at least 5 
percent of small entities.
    For purposes of the RFA, HHS considers all health care providers to 
be small entities either by 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 $8 
million to $41.5 million. As of August 8, 2020, the Health Center 
Program provides grant funding under section 330(e) of the PHS Act to 
1,310 organizations to provide health care to medically underserved 
communities. HHS has determined, and the Secretary certifies, that this 
rule will not have a significant impact on the operations of a 
substantial number of small health centers; therefore, we are not 
preparing an analysis of impact for the RFA.
    HHS welcomed comments concerning the impact of this proposed rule 
on health centers and received one comment on this topic. The commenter 
argued that the rule will have a significant economic impact on a 
substantial number of small entities. The commenter argued that the 
stress this rule will cause to health centers may result in reductions 
in services, employment, and access to life-saving treatment. 
Specifically, the commenter stated that the rule will have the impact 
of (1) dramatically reducing 340B savings for health centers, (2) 
likely increasing the cost of life-saving medications nationwide, and 
(3) creating enormous administrative burdens for health centers, 
specifically because the NPRM proposed defining ``low-income'' as at or 
below 350 percent of the FPG, a different income threshold than the 200 
percent used by the Health Center Program.
    HHS acknowledges the commenter's concerns. However, HHS has not 
changed its determination that the RFA does not apply to this rule. The 
comment did not demonstrate that a reduction in 340B savings would meet 
the threshold of a 3 percent impact on 5 percent of small entities. A 
reduction in 340B savings is limited to those related to these two 
medication categories, and only when provided to low-income patients 
that are uninsured, or who have a high cost sharing requirement or high 
unmet deductible. The comment did not demonstrate or explain how this 
rule will increase the cost of medications nationwide. To the contrary, 
the rule will increase the access of certain low-income patients to 
affordable insulin and injectable epinephrine.

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 2019, that threshold level was 
approximately $164 million. HHS does not expect this rule to exceed the 
threshold.

Executive Order 13132--Federalism

    HHS has reviewed this 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.'' This rule 
would not adversely affect the following family elements: Family 
safety, family stability, marital commitment; parental rights in the 
education, nurture, and supervision

[[Page 83830]]

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.

Paperwork Reduction Act of 1995

    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 rule is projected 
to have no impact on current reporting and recordkeeping burden for 
health centers. This rule would result in no new reporting burdens. HHS 
welcomed but did not receive comments that this rule would result in 
new reporting burdens for health centers.

List of Subjects in 42 CFR Part 51c

    Grant programs--Health, Health care, Health facilities, Reporting 
and recordkeeping requirements.

    Dated: December 16, 2020.
Thomas J. Engels,
Administrator, Health Resources and Services Administration.
    Dated: December 17, 2020.
Alex M. Azar II,
Secretary, Department of Health and Human Services.

    Accordingly, by the authority vested in me as the Secretary of 
Health and Human Services, and for the reasons set forth in the 
preamble, 42 Code of Federal Regulations Part 51c is amended as 
follows:

PART 51c--GRANTS FOR COMMUNITY HEALTH CENTERS

0
1. The authority statement for part 51c is revised to read as follows:

    Authority: 42 U.S.C. 254b (Sec. 330, Public Health Service Act); 
42 U.S.C. 216 (Sec. 215, Public Health Service Act,).


0
2. Section 51c.303 is amended by adding paragraph (w) to read as 
follows:


Sec.  51c.303  Project elements.

* * * * *
    (w)(1) Provision. To the extent that an applicant for funding under 
Section 330(e) of the Public Health Service Act (42 U.S.C. 254b(e)) has 
indicated that it plans to distribute, either directly, or through a 
written agreement, drugs purchased through the 340B Drug Pricing 
Program (42 U.S.C. 256b), and to the extent that such applicant plans 
to make insulin and/or injectable epinephrine available to its 
patients, the applicant shall provide an assurance that it has 
established practices to provide insulin and injectable epinephrine at 
or below the discounted price paid by the health center grantee or 
subgrantee under the 340B Drug Pricing Program (plus a minimal 
administration fee) to health center patients with low incomes, as 
determined by the Secretary, who have a high cost sharing requirement 
for either insulin or injectable epinephrine; have a high unmet 
deductible; or have no health insurance.
    (2) Definitions. For purposes of this paragraph (w) exclusively:
    (i) Established practices. The health center has written policies, 
procedures, and/or other relevant documents that it has established 
practices to offer insulin and injectable epinephrine at no more than 
the discounted price paid by the health center under the 340B Drug 
Pricing Program plus a minimal administration fee. Such established 
practices may reflect that provision of insulin and injectable 
epinephrine at or below the 340B discounted price is subject to 
potential restrictions through contracts with third-party payors.
    (ii) Health center grantee or subgrantee. Organizations receiving 
an award under section 330(e) of the PHS Act (i.e., health centers) 
directly or as subgrantees of section 330(e) grant funding.
    (iii) Minimal administration fee. The minimal administration fee 
includes any dispensing fee, counseling costs, and any other charges 
associated with the patient receiving the medication. The 
administration fee may not create a barrier to low-income health center 
patients accessing these drugs, and health centers should make every 
reasonable effort to keep the fee as low as possible. Health centers 
may refer to the Medicaid dispensing fee in their state as a reference 
for minimal administration fees. When there is a separate fee 
associated with provision of the pharmaceutical service, such as a 
dispensing fee, health centers must apply a sliding fee discount to 
that fee.
    (iv) Individuals with low incomes. Individuals and families with 
annual incomes no greater than 350 percent of the Federal Poverty 
Guidelines.
    (v) High cost sharing requirement. A cost sharing requirement that 
exceeds twenty percent of the amount the health center charges its 
patients for the drug is a high cost sharing requirement. Cost sharing 
refers to a patient's out-of-pocket costs, including, but not limited 
to, deductibles, coinsurance, and copayments, or similar charges.
    (vi) High deductible. High deductible refers to a deductible amount 
that is not less than the amount required for a high deductible health 
plan as defined in section 223(c)(2)(A) of the Internal Revenue Code, 
as implemented by the Internal Revenue Service.
    (vii) High unmet deductible. High unmet deductible refers to the 
amount a patient owes toward their high deductible at any time during a 
plan year in which the outstanding deductible portion exceeds 20 
percent of the total deductible for the plan year.
    (viii) Health insurance. Health insurance refers to private 
insurance, State and exchange plans, employer-funded plans, and 
coverage under titles XVIII, XIX, and XXI of the Social Security Act.
    (ix) ``Patient.'' an individual is not be considered a ``patient'' 
of the health center if the only health care service received by the 
individual from the health center is the dispensing of a drug or drugs 
for subsequent self-administration or administration in the home 
setting.

[FR Doc. 2020-28483 Filed 12-22-20; 8:45 am]
BILLING CODE 4165-15-P