A new final rule issued by the Health Resources and Services Administration (HRSA) puts in place new ceiling pricing and penalty guidelines for drug manufacturers.
The U.S. Department of Health and Human services issued the final rule following a proposed rule issued in June 2015 and an extended comment period beginning in April 2016 to address issues raised by Congress as part of the Patient Protection and Affordable Care Act.
The rule applies to drug manufacturers that provide products to 340B covered entities. Currently, hospitals falling into six categories can be covered by the 340B program. Those are disproportionate share hospitals; cancer or children’s hospitals exempt from the Medicare prospective payment system; sole community hospitals; rural referral centers; and critical access hospitals.
As part of the rule, drug manufacturers now bear the responsibility for ensuring that distributors don’t violate ceiling pricing rules. Any manufacturers found in violation would be subject to a civil penalty of up to $5,000 per instance. The rule defines an instance as each order by National Drug Code number for a particular drug. The HRSA didn’t specify the standards for “knowingly and intentionally” as part of the text, instead indicating that task will be left to the Office of the Inspector General, which must enforce the rule or take action against those companies in violation.
Calculating ceiling prices for drugs will use the proposed rule’s formula for all drugs covered by the 340B Program. The price is determined by subtracting the drug's Medicaid Unit Rebate Amount from the drug’s Average Manufacturer Price.
