81 FR 22960 - 340B Drug Pricing Program Ceiling Price and Manufacturer Civil Monetary Penalties Regulation; Reopening of Comment Period

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Federal Register Volume 81, Issue 75 (April 19, 2016)

This document reopens the comment period for the June 17, 2015, proposed rule entitled ``340B Drug Pricing Program Ceiling Price and Manufacturer Civil Monetary Penalties Regulation.'' The comment period for the proposed rule, which ended on August 17, 2015, is reopened for 30 days.

[Federal Register Volume 81, Number 75 (Tuesday, April 19, 2016)]
[Proposed Rules]
[Pages 22960-22961]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-09017]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

42 CFR Part 10

RIN 0906-AA89


340B Drug Pricing Program Ceiling Price and Manufacturer Civil 
Monetary Penalties Regulation; Reopening of Comment Period

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

ACTION: Notice; reopening of comment period.

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SUMMARY: This document reopens the comment period for the June 17, 
2015, proposed rule entitled ``340B Drug Pricing Program Ceiling Price 
and Manufacturer Civil Monetary Penalties Regulation.'' The comment 
period for the proposed rule, which ended on August 17, 2015, is 
reopened for 30 days.

DATES: The comment period for the proposed rule published on June 17, 
2015 (80 FR 34583), is reopened and ends on May 19, 2016.

ADDRESSES: In commenting, please refer to the Regulatory Information 
Number (RIN) 0906-AA89, 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-AA89 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.

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: On June 17, 2015, the Department of Health 
and Human Services (HHS) published a proposed rule in the Federal 
Register (80 FR 34583) entitled, ``340B Drug Pricing Program Ceiling 
Price and Manufacturer Civil Monetary Penalties Regulation'' that would 
set forth the calculation of the ceiling price and application of civil 
monetary penalties for section 340B of the Public Health Service Act 
(PHSA), which is referred to as the ``340B Drug Pricing Program'' or 
the ``340B Program.'' In light of the comments received, HHS is 
reopening the comment period for 30 days for the purpose of inviting 
public comments on several specific areas, summarized below. Comments 
may be submitted on any aspect of the proposed rule, not just those 
areas specifically addressed below. Commenters do not need to resubmit 
comments previously submitted, as all previous comments are currently 
under review and will be considered prior to the finalization of the 
proposed rule.

Ceiling Price for a Covered Outpatient Drug Exception

    In the June 17, 2015, notice of proposed rulemaking (80 FR 34583), 
HHS proposed that when the calculation of the 340B ceiling price 
resulted in an amount less than $0.01, the ceiling price would be $0.01 
per unit of measure (hereinafter, penny pricing). In the notice of 
proposed rulemaking (NPRM), we recognized that it was not reasonable 
for a manufacturer to set the ceiling price at $0.00 per unit of 
measure. HHS received a number of comments supporting and opposing the 
penny pricing proposal.
    Commenters suggested a number of alternatives to penny pricing, 
including: The federal ceiling price, the most recent positive ceiling 
price from previous quarters, and nominal sales price. Some commenters 
stated that the federal ceiling price, which is the basis for prices 
paid by certain federal government programs, would be a viable 
alternative. Other commenters suggested that charging a ceiling price 
from previous quarters in which the ceiling price was greater than 
$0.00 would be reasonable. Finally, several commenters suggested that 
nominal pricing, which is a term used in the Medicaid Drug Rebate 
Program, would be more appropriate. Other commenters suggested that 
manufacturers should be able to utilize any other reasonable 
alternative.
    Given these comments, HHS is considering whether any of these 
alternatives or other alternatives not raised by the commenters, alone 
or in combination, would be more appropriate than the penny pricing 
proposal and whether to revise the proposed regulatory text in 42 CFR 
10.10(b). As the NPRM did not indicate that alternatives to the penny 
pricing proposal would be considered, and given the number of comments 
on this issue, HHS is reopening the comment period specifically to 
invite comments on whether we should adopt an alternative policy to 
penny pricing. By reopening the comment period as to this specific 
issue, all parties will have an opportunity to express their views on 
penny pricing and other alternatives prior to finalization of the 
proposed rule.

New Drug Price Estimation

    In the NPRM, HHS proposed that manufacturers estimate the ceiling 
price for a new covered outpatient drug as of the date the drug is 
first available for sale, and provide HRSA an estimated ceiling price 
for each of the first three quarters the drug is available for sale. 
HHS also proposed that, beginning with the fourth quarter the drug is 
available for sale, the manufacturer must calculate the ceiling price 
as described in proposed 42 CFR 10.10(a). Under the proposed rule, the 
actual ceiling price for the first three quarters must also be 
calculated and manufacturers would be required to provide a refund or 
credit to any covered entity which purchased the covered outpatient 
drug at a price greater than the calculated ceiling price. HHS proposed 
that any refunds or credits owed to a covered entity must be provided 
by the end of the fourth quarter. HHS received numerous comments 
supporting and opposing the various components of its proposal on new 
drug price estimation.
    Several commenters supported a specific methodology for calculating 
new drug prices, which included setting the price of the new covered 
outpatient drug as wholesale acquisition cost (WAC) minus the 
applicable rebate percentage (i.e., 23.1 percent for most single-source 
and innovator drugs, 17.1 percent for clotting factors and drugs 
approved exclusively for pediatric indications, and 13 percent for 
generics and OTCs). Commenters argued that this price would eliminate 
the need to estimate the price for the first three quarters and would 
result in a reasonable ceiling price. We are seeking comment on this 
specific methodology for the estimation of a new covered outpatient 
drug pricing and at which

[[Page 22961]]

quarter a manufacturer should refund or credit a covered entity if 
there is an overcharge.

Definition of ``Knowing and Intentional''

    Under section 340B(d)(1)(B)(vi) of the Public Health Service Act, 
the Secretary is charged with issuing civil monetary penalties for 
manufacturers who have ``knowingly and intentionally'' charged a 
covered entity a price that exceeds the 340B ceiling price. Although 
the knowing and intentional standard was included in the NPRM issued on 
June 17, 2015, ``knowing and intentional'' was not specifically 
defined. HHS received a number of comments urging HHS to further define 
these terms. Through this reopening of the NPRM comment period, we are 
seeking comment on the definition of the knowing and intentional 
standard for purposes of this civil monetary penalty authority. We 
believe that, by reopening the comment period as to this issue, all 
parties will have an opportunity to express their views on this 
definitional standard prior to finalization of the rule.
    HHS is considering whether ``knowing and intentional'' should be 
further defined. If the terms are defined, possible definitions could 
be: (1) Actual knowledge by the manufacturer, its employees, or its 
agents of the instance of overcharge; (2) willful or purposeful acts 
by, or on behalf of, the manufacturer that lead to the instance of 
overcharge; (3) acting consciously and with awareness of the acts 
leading to the instance of overcharge; and/or (4) acting with a 
conscious desire or purpose to cause an overcharge or acting in a way 
practically certain to result in an overcharge. Manufacturers do not 
need to intend specifically to violate the 340B statute; but rather to 
have knowingly and intentionally overcharged the 340B covered entity.
    HHS understands that this is difficult to demonstrate. As such, HHS 
is soliciting input on circumstances in which the requisite intent 
should and should not be inferred. In particular, HHS would like to 
solicit comment on the concept that manufacturers would not be 
considered to have the requisite intent in the following circumstances:
     The manufacturer made an inadvertent, unintentional, or 
unrecognized error in calculating the ceiling price;
     A manufacturer acted on a reasonable interpretation of 
agency guidance; or
     When a manufacturer has established alternative allocation 
procedures where there is an inadequate supply of product to meet 
market demand, as long as covered entities are able to purchase on the 
same terms as all other similarly-situated providers.
    HHS welcomes comments regarding other situations where the 
requisite intent may or may not be demonstrated.
    Because of the scope of the proposed rule, and since we have 
specifically requested the public's comments on various aspects of the 
rule, we believe that it is important to allow ample time for the 
public to consider these approaches to these specific policies in the 
proposed rule. Therefore, we have decided to reopen the comment period 
for an additional 30 days. HHS believes that a 30-day period is 
sufficient and balances the interests of encouraging public 
participation in the rulemaking process with the desire to not 
unnecessarily delay key decisions about rulemaking. This document 
announces the reopening of the comment period to end May 19, 2016.

    Dated: April 6, 2016.
James Macrae,
Acting Administrator, Health Resources and Services Administration.
    Approved: April 12, 2016.
Sylvia M. Burwell,
Secretary.
[FR Doc. 2016-09017 Filed 4-18-16; 8:45 am]
 BILLING CODE 4165-15-P