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“How Much Will You Pay for an Inaccurate 340B Ceiling Price?”

To Be or Not To 340B By Alyce C. Katayama and Elizabeth R. Gebarski

Under the authority granted it by the Patient Protection and Affordable Care Act, the Health Resources and Services Administration (HRSA) is moving forward to laying the groundwork for imposing civil monetary penalties on manufacturers that overcharge covered entities under the 340B Program.

HRSA has submitted its second Information Collection Request (ICR) regarding calculation and verification of 340B ceiling prices. http://www.gpo.gov/fdsys/pkg/FR-2015-04-21/pdf/2015-09078.pdf. Interested persons only have until May 21, 2015 to weigh in. Comments must be submitted to the desk officer for HRSA, either by email to OIRA_submission@omb.eop.gov or by fax to 202-395-5806.

340B Program manufacturers have a statutory obligation to provide covered outpatient drugs to covered entities at no greater than the 340B ceiling price. The 340B ceiling price refers to the maximum amount a manufacturer may charge a covered entity. Currently, this 340B ceiling is calculated by HRSA, using pricing information which manufacturers are required to submit to the Centers for Medicare and Medicaid Services (CMS).

The manufacturers’ statutory obligation is largely enforced by the 340B Program participants. Once HRSA is alerted to a potential violation of the manufacturers’ duty, HRSA will take action by providing relevant information to covered entities. Then, the manufacturer and the aggrieved covered entities are generally left to settle the matter amongst themselves. But, this reactive process is poised to change.

As previously indicated by Commander Krista Pedley, Director of the Office of Pharmacy Affairs, HRSA plans to develop rules regarding the calculation and verification of 340B ceiling prices and the imposition of civil monetary penalties on manufacturers that charge covered entities more than the 340B ceiling price. This ICR is one more step in HRSA’s progression toward those rules.

HRSA is tasked with developing a system that will ensure manufacturers do not charge covered entities more than the 340B ceiling price. In order to carry out this task, HRSA has proposed that manufacturers report quarterly pricing information directly to HRSA through an online portal, which has yet to be launched. It is not clear whether this reporting will be in lieu of, or in addition to, the reporting to CMS, which is now required. The required information will include:

  • Average Manufacturer Price,
  • Unit Rebate Amount,
  • Package Sizes,
  • National Drug Code (NDC),
  • Period of sale (year and quarter), and
  • 340B Program manufacturer-determined 340B ceiling price for each NDC it produces.

The 340B ceiling price calculated by HRSA from this information will then be compared to the ceiling price data submitted by the manufacturer. If there are discrepancies, the manufacturer will have an opportunity to correct the error on the online portal or work with HRSA and covered entities if the manufacturer has overcharged covered entities. HRSA hopes that by receiving this information directly from manufacturers, it will discover discrepancies faster; and, be able to take corrective action more swiftly.

HRSA plans to augment these corrective actions with civil monetary penalties when covered entities have been overcharged. In fact, the latest version of the proposed rule on ceiling price and civil monetary penalties for manufacturers has been pending with the Office of Management and Budget since April 8, 2015. The abstract of this rule indicates HRSA proposes the penalties not exceed $5,000 per “instance.” The first iteration of this rule, published as a proposal in September 2010, did not define “instance;” but, instead, asked for comments as to whether it should be defined as per unit of a drug and/or per commercial transaction. http://www.gpo.gov/fdsys/pkg/FR-2010-09-20/pdf/2010-23461.pdf.

Watch the To Be or Not to 340B Blog for continuing developments in this regard. For now, make sure to get your comments in by May 21, 2015!

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