82 FR 39553 - 340B Drug Pricing Program Ceiling Price and Manufacturer Civil Monetary Penalties Regulation

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Federal Register Volume 82, Issue 160 (August 21, 2017)

Page Range39553-39555
FR Document2017-17633

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.'' HHS is soliciting comments on delaying the effective date of the January 5, 2017 final rule that sets forth the calculation of the ceiling price and application of civil monetary penalties, and applies to all drug manufacturers that are required to make their drugs available to covered entities under the 340B Program. HHS proposes to delay the effective date of the final rule published in the Federal Register (82 FR 1210, January 5, 2017) to July 1, 2018. HHS proposes this action in order to allow a more deliberate process of considering alternative and supplemental regulatory provisions and to allow for sufficient time for additional rulemaking, as set forth below.

Federal Register, Volume 82 Issue 160 (Monday, August 21, 2017)
[Federal Register Volume 82, Number 160 (Monday, August 21, 2017)]
[Proposed Rules]
[Pages 39553-39555]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-17633]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

42 CFR Part 10

RIN 0906-AB11


340B Drug Pricing Program Ceiling Price and Manufacturer Civil 
Monetary Penalties Regulation

AGENCY: Health Resources and Services Administration, HHS.

ACTION: Notice of proposed rulemaking; further delay of effective date.

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SUMMARY: The Health Resources and Services Administration (HRSA)

[[Page 39554]]

administers section 340B of the Public Health Service Act (PHSA), which 
is referred to as the ``340B Drug Pricing Program'' or the ``340B 
Program.'' HHS is soliciting comments on delaying the effective date of 
the January 5, 2017 final rule that sets forth the calculation of the 
ceiling price and application of civil monetary penalties, and applies 
to all drug manufacturers that are required to make their drugs 
available to covered entities under the 340B Program. HHS proposes to 
delay the effective date of the final rule published in the Federal 
Register (82 FR 1210, January 5, 2017) to July 1, 2018. HHS proposes 
this action in order to allow a more deliberate process of considering 
alternative and supplemental regulatory provisions and to allow for 
sufficient time for additional rulemaking, as set forth below.

DATES: Submit comments on or before September 20, 2017.

ADDRESSES: You may submit comments, identified by the Regulatory 
Information Number (RIN) 0906-AB11, by any of the following methods. 
Please submit your comments in only one of these ways to minimize the 
receipt of duplicate submissions.
     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-AB11 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 confidential commercial 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

    On September 30, 2010, HHS published an advanced notice of proposed 
rulemaking (ANPRM) in the Federal Register, ``340B Drug Pricing Program 
Manufacturer Civil Monetary Penalties'' (75 FR 57230, September 20, 
2010). HHS subsequently published a notice of proposed rulemaking 
(NPRM) on June 17, 2015 to implement 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 to establish the requirement that a 
manufacturer charge $.01 (penny pricing) for each unit of a drug 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 original 
comment period established in the NPRM and the reopened comment period 
announced in the April 19, 2016 notice were considered in the 
development of the final rule. The provisions of that final rule were 
to be effective March 6, 2017; however, HHS issued a subsequent final 
rule (82 FR 12508, March 6, 2017) delaying the effective date to March 
21, 2017, in accordance with a January 20, 2017 memorandum from the 
Assistant to the President and Chief of Staff, titled ``Regulatory 
Freeze Pending Review.'' \1\ In the January 5, 2017 final rule, HHS 
acknowledged that the effective date fell during the middle of a 
quarter and stakeholders needed time to adjust systems and update their 
policies and procedures. As such, HHS stated that it intended to 
enforce the requirements of the final rule at the start of the next 
quarter, which began April 1, 2017.
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    \1\ See: https://www.whitehouse.gov/the-press-office/2017/01/20/memorandum-heads-executive-departments-and-agencies.
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    After further consideration and to provide affected parties 
sufficient time to make needed changes to facilitate compliance, and 
because questions were raised, HHS issued an interim final rule (82 FR 
14332, March 20, 2017), to delay the effective date of the final rule 
to May 22, 2017, and solicited additional comments on whether that date 
should be further extended to October 1, 2017. HHS received several 
comments to the interim final rule, some supporting and some opposing 
the delay of the effective date to May 22, 2017, or alternatively to 
October 1, 2017. After careful consideration of the comments received, 
HHS delayed the effective date of the January 5, 2017 final rule to 
October 1, 2017 (82 FR 22893, May 19, 2017).

II. Proposal To Delay the Effective Date of the Final Rule

    HHS proposes to further delay the effective date of the January 5, 
2017 final rule because it continues to examine important substantive 
issues in matters covered by the rule. HHS intends to engage in 
additional rulemaking on these issues. HHS believes that the proposed 
delay will allow for necessary time to more fully consider the 
substantial questions of fact, law and policy raised by the rule, 
consistent with the aforementioned ``Regulatory Freeze Pending 
Review,'' memorandum. Requiring manufacturers to make targeted and 
potentially costly changes to pricing systems and business procedures 
in order to comply with a rule that is under further consideration and 
for which substantive questions have been raised would be disruptive. 
We also believe additional time is needed to more fully consider 
previous objections regarding the timing of the effective date and 
challenges associated with complying with the rule, as well as other 
objections to the rule.
    In addition, the January 20, 2017, Executive Order entitled, 
``Minimizing the Economic Burden of the Patient Protection and 
Affordable Care Act Pending Repeal,'' specifically instructs HHS and 
all other heads of executive offices to utilize all authority and 
discretion available to delay the implementation of certain provisions 
or requirements of the Patient Protection and Affordable Care Act.\2\ 
The January 5, 2017 final rule is based on changes made to the 340B 
Program by the Patient Protection and Affordable Care Act. HHS is 
proposing to delay the effective date of the January 5, 2017 final rule 
to July 1, 2018, to also allow for a sufficient amount of time to more 
fully consider the regulatory burdens that may be posed by this final 
rule.
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    \2\ See: https://www.whitehouse.gov/the-press-office/2017/01/2/executive-order-minimizing-economic-burden-patient-protection-and
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    At this time, HHS seeks public comments regarding the impact of 
delaying the effective date of the final rule, published January 5, 
2017, for an additional nine months from the current

[[Page 39555]]

effective date of October 1, 2017 to July 1, 2018, while a more 
deliberate rulemaking process is considered. HHS encourages all 
stakeholders to provide comments on this proposed rule.

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 (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).

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 delay the effective date 
of the January 5, 2017, final rule will have an economic impact of $100 
million or more, and is therefore not designated as an ``economically 
significant'' proposed rule under section 3(f)(1) of the Executive 
Order 12866. Therefore, the economic impact of having no rule in place 
related to the policies addressed in the final rule is believed to be 
minimal, as the policies would not yet be required or enforceable.
    Executive Order 13771, entitled Reducing Regulation and Controlling 
Regulatory Costs, was issued on January 30, 2017. This proposed rule is 
not expected to be an EO 13771 regulatory action because this proposed 
rule is not significant under EO 12866.

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 by 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 
health care 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 this RFA. HHS estimates that the economic impact on small entities 
and small manufacturers will be minimal. HHS welcomes comments 
concerning the impact of this proposed rule on small manufacturers and 
small health care providers.

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 2013, that threshold level was 
approximately $141 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 proposed 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.''

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. This proposed rule 
would result in no new reporting burdens. Comments are welcome on the 
accuracy of this statement.

George Sigounas,
Administrator, Health Resources and Services Administration.
    Approved: August 16, 2017.
Thomas E. Price,
Secretary, Department of Health and Human Services.
[FR Doc. 2017-17633 Filed 8-17-17; 11:15 am]
 BILLING CODE 4165-15-P


Current View
CategoryRegulatory Information
CollectionFederal Register
sudoc ClassAE 2.7:
GS 4.107:
AE 2.106:
PublisherOffice of the Federal Register, National Archives and Records Administration
SectionProposed Rules
ActionNotice of proposed rulemaking; further delay of effective date.
DatesSubmit comments on or before September 20, 2017.
ContactCAPT Krista Pedley, Director, OPA, HSB, HRSA, 5600 Fishers Lane, Mail Stop 08W05A, Rockville, MD 20857, or by telephone at 301-594-4353.
FR Citation82 FR 39553 
RIN Number0906-AB11

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